Making its debut on 04/19/2006, smart beta exchange traded fund First Trust NASDAQ-100-Technology Sector ETF (QTEC) provides investors 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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
QTEC is managed by First Trust Advisors, and this fund has amassed over $2.91 billion, which makes 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.55%.
The fund has a 12-month trailing dividend yield of 0.00%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 85.4% of the portfolio. Telecom and Consumer Discretionary round out the top three.
When you look at individual holdings, Applovin Corp. (class A) (APP) accounts for about 3.63% of the fund's total assets, followed by Broadcom Inc. (AVGO) and Shopify Inc. (class A) (SHOP).
QTEC's top 10 holdings account for about 27.32% of its total assets under management.
Performance and Risk
The ETF has gained about 23.2% and was up about 20.47% so far this year and in the past one year (as of 10/17/2025), respectively. QTEC has traded between $149.56 and $237.69 during this last 52-week period.
The ETF has a beta of 1.27 and standard deviation of 27.06% for the trailing three-year period, making it a high risk choice in the space. With about 46 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) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $90.88 billion in assets, Vanguard Information Technology ETF has $110.73 billion. XLK has an expense ratio of 0.08% and VGT changes 0.09%.
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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First Trust NASDAQ-100-Technology Sector ETF (QTEC): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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