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Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) debuted on 04/19/2006, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. QTEC has been able to amass assets over $1.55 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for QTEC are 0.56%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.22%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 91.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
When you look at individual holdings, Micron Technology, Inc. (MU - Free Report) accounts for about 2.96% of the fund's total assets, followed by Zscaler, Inc. (ZS - Free Report) and Adobe Incorporated (ADBE - Free Report) .
QTEC's top 10 holdings account for about 28.81% of its total assets under management.
Performance and Risk
The ETF has added roughly 17.73% so far this year and is down about -1.51% in the last one year (as of 05/09/2023). In the past 52-week period, it has traded between $98.17 and $137.21.
The fund has a beta of 1.17 and standard deviation of 31.28% for the trailing three-year period, which makes QTEC a high risk choice in this particular 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 $43.58 billion in assets, Vanguard Information Technology ETF has $46.33 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?
A smart beta exchange traded fund, the First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) debuted on 04/19/2006, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. QTEC has been able to amass assets over $1.55 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for QTEC are 0.56%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.22%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 91.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
When you look at individual holdings, Micron Technology, Inc. (MU - Free Report) accounts for about 2.96% of the fund's total assets, followed by Zscaler, Inc. (ZS - Free Report) and Adobe Incorporated (ADBE - Free Report) .
QTEC's top 10 holdings account for about 28.81% of its total assets under management.
Performance and Risk
The ETF has added roughly 17.73% so far this year and is down about -1.51% in the last one year (as of 05/09/2023). In the past 52-week period, it has traded between $98.17 and $137.21.
The fund has a beta of 1.17 and standard deviation of 31.28% for the trailing three-year period, which makes QTEC a high risk choice in this particular 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 $43.58 billion in assets, Vanguard Information Technology ETF has $46.33 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.