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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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $4.01 billion, this makes it one of the largest ETFs in the Technology ETFs. QTEC is managed by First Trust Advisors. 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
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.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.07%.
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 91.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Looking at individual holdings, Crowdstrike Holdings, Inc. (class A) (CRWD - Free Report) accounts for about 3.58% of total assets, followed by Pdd Holdings Inc. (adr) (PDD - Free Report) and Zscaler, Inc. (ZS - Free Report) .
The top 10 holdings account for about 31.25% of total assets under management.
Performance and Risk
So far this year, QTEC has added roughly 8.86%, and it's up approximately 53.94% in the last one year (as of 03/28/2024). During this past 52-week period, the fund has traded between $118.86 and $195.66.
The ETF has a beta of 1.19 and standard deviation of 30.01% for the trailing three-year period, making it a high risk choice in the space. With about 39 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 $65.24 billion in assets, Vanguard Information Technology ETF has $65.57 billion. XLK has an expense ratio of 0.09% 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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $4.01 billion, this makes it one of the largest ETFs in the Technology ETFs. QTEC is managed by First Trust Advisors. 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
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.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.07%.
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 91.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Looking at individual holdings, Crowdstrike Holdings, Inc. (class A) (CRWD - Free Report) accounts for about 3.58% of total assets, followed by Pdd Holdings Inc. (adr) (PDD - Free Report) and Zscaler, Inc. (ZS - Free Report) .
The top 10 holdings account for about 31.25% of total assets under management.
Performance and Risk
So far this year, QTEC has added roughly 8.86%, and it's up approximately 53.94% in the last one year (as of 03/28/2024). During this past 52-week period, the fund has traded between $118.86 and $195.66.
The ETF has a beta of 1.19 and standard deviation of 30.01% for the trailing three-year period, making it a high risk choice in the space. With about 39 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 $65.24 billion in assets, Vanguard Information Technology ETF has $65.57 billion. XLK has an expense ratio of 0.09% 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.