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Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
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Making its debut on 04/19/2006, smart beta exchange traded fund First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) provides investors 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
Because the fund has amassed over $3.88 billion, this makes it one of the largest ETFs in the Technology ETFs. QTEC is managed by First Trust Advisors. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for QTEC are 0.57%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.04%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 89.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Fortinet, Inc. (FTNT - Free Report) accounts for about 3.46% of total assets, followed by Mongodb, Inc. (MDB - Free Report) and Workday, Inc. (class A) (WDAY - Free Report) .
The top 10 holdings account for about 29.9% of total assets under management.
Performance and Risk
The ETF has added about 6.78% and it's up approximately 29% so far this year and in the past one year (as of 10/02/2024), respectively. QTEC has traded between $137.75 and $205.38 during this last 52-week period.
QTEC has a beta of 1.14 and standard deviation of 30.67% 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 $68.41 billion in assets, Vanguard Information Technology ETF has $75.23 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?
Making its debut on 04/19/2006, smart beta exchange traded fund First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) provides investors 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
Because the fund has amassed over $3.88 billion, this makes it one of the largest ETFs in the Technology ETFs. QTEC is managed by First Trust Advisors. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for QTEC are 0.57%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.04%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 89.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Fortinet, Inc. (FTNT - Free Report) accounts for about 3.46% of total assets, followed by Mongodb, Inc. (MDB - Free Report) and Workday, Inc. (class A) (WDAY - Free Report) .
The top 10 holdings account for about 29.9% of total assets under management.
Performance and Risk
The ETF has added about 6.78% and it's up approximately 29% so far this year and in the past one year (as of 10/02/2024), respectively. QTEC has traded between $137.75 and $205.38 during this last 52-week period.
QTEC has a beta of 1.14 and standard deviation of 30.67% 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 $68.41 billion in assets, Vanguard Information Technology ETF has $75.23 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.