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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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. QTEC has been able to amass assets over $3.77 billion, making it one of the largest 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 0.57%, which makes it on par with most peer products in the space.
QTEC's 12-month trailing dividend yield is 0.06%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 90.20% of the portfolio.
When you look at individual holdings, Datadog, Inc. (class A) (DDOG - Free Report) accounts for about 2.68% of the fund's total assets, followed by Mongodb, Inc. (MDB - Free Report) and Atlassian Corporation (class A) (TEAM - Free Report) .
QTEC's top 10 holdings account for about 25.67% of its total assets under management.
Performance and Risk
So far this year, QTEC has added about 3.55%, and was up about 15.54% in the last one year (as of 08/02/2024). During this past 52-week period, the fund has traded between $137.75 and $205.38.
QTEC has a beta of 1.15 and standard deviation of 30.15% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 43 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 $65.28 billion in assets, Vanguard Information Technology ETF has $70.44 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 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. QTEC has been able to amass assets over $3.77 billion, making it one of the largest 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 0.57%, which makes it on par with most peer products in the space.
QTEC's 12-month trailing dividend yield is 0.06%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 90.20% of the portfolio.
When you look at individual holdings, Datadog, Inc. (class A) (DDOG - Free Report) accounts for about 2.68% of the fund's total assets, followed by Mongodb, Inc. (MDB - Free Report) and Atlassian Corporation (class A) (TEAM - Free Report) .
QTEC's top 10 holdings account for about 25.67% of its total assets under management.
Performance and Risk
So far this year, QTEC has added about 3.55%, and was up about 15.54% in the last one year (as of 08/02/2024). During this past 52-week period, the fund has traded between $137.75 and $205.38.
QTEC has a beta of 1.15 and standard deviation of 30.15% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 43 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 $65.28 billion in assets, Vanguard Information Technology ETF has $70.44 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.