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Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
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The First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) was launched on 04/19/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.56 billion, which makes it one of the larger ETFs in the Technology ETFs. Before fees and expenses, QTEC seeks to match the performance of the NASDAQ-100 Technology Sector Index.
The NASDAQ-100 Technology Sector Index is an equal-weighted index based on the securities of the NASDAQ-100 Index that are classified as technology.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.13%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
QTEC's heaviest allocation is in the Information Technology sector, which is about 91% of the portfolio.
Looking at individual holdings, Asml Holding N.v. (new York Registry Shares) (ASML - Free Report) accounts for about 3.11% of total assets, followed by Cognizant Technology Solutions Corporation (CTSH - Free Report) and Meta Platforms Inc. (class A) (META - Free Report) .
The top 10 holdings account for about 29.87% of total assets under management.
Performance and Risk
The ETF has gained about 16.90% and is down about -14.60% so far this year and in the past one year (as of 03/07/2023), respectively. QTEC has traded between $98.17 and $157.87 during this last 52-week period.
The ETF has a beta of 1.17 and standard deviation of 35.76% for the trailing three-year period, making it a high risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ-100-Technology Sector ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $41.15 billion in assets, Vanguard Information Technology ETF has $43.94 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
The First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) was launched on 04/19/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.56 billion, which makes it one of the larger ETFs in the Technology ETFs. Before fees and expenses, QTEC seeks to match the performance of the NASDAQ-100 Technology Sector Index.
The NASDAQ-100 Technology Sector Index is an equal-weighted index based on the securities of the NASDAQ-100 Index that are classified as technology.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.13%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
QTEC's heaviest allocation is in the Information Technology sector, which is about 91% of the portfolio.
Looking at individual holdings, Asml Holding N.v. (new York Registry Shares) (ASML - Free Report) accounts for about 3.11% of total assets, followed by Cognizant Technology Solutions Corporation (CTSH - Free Report) and Meta Platforms Inc. (class A) (META - Free Report) .
The top 10 holdings account for about 29.87% of total assets under management.
Performance and Risk
The ETF has gained about 16.90% and is down about -14.60% so far this year and in the past one year (as of 03/07/2023), respectively. QTEC has traded between $98.17 and $157.87 during this last 52-week period.
The ETF has a beta of 1.17 and standard deviation of 35.76% for the trailing three-year period, making it a high risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ-100-Technology Sector ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $41.15 billion in assets, Vanguard Information Technology ETF has $43.94 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.