Launched on 04/19/2006, the First Trust NASDAQ-100-Technology Sector ETF (QTEC) is a smart beta exchange traded fund offering 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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
QTEC is managed by First Trust Advisors, and this fund has amassed over $2.93 billion, which makes it one of the largest ETFs in the Technology ETFs. This particular fund seeks to match the performance of the NASDAQ-100 Technology Sector Index before fees and expenses.
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.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.03%.
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.
Representing 89.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Pdd Holdings Inc. (adr) (PDD) accounts for about 2.78% of total assets, followed by Doordash, Inc. (class A) (DASH) and Kla Corporation (KLAC).
Its top 10 holdings account for approximately 25.78% of QTEC's total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ-100-Technology Sector ETF has lost about -20.56% so far, and is down about -20.78% over the last 12 months (as of 04/09/2025). QTEC has traded between $149.56 and $210.67 in this past 52-week period.
QTEC has a beta of 1.23 and standard deviation of 29.65% for the trailing three-year period, which makes the fund 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 $54.99 billion in assets, Vanguard Information Technology ETF has $64.47 billion. XLK has an expense ratio of 0.08% and VGT charges 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 Reports KLA Corporation (KLAC): Free Stock Analysis Report Technology Select Sector SPDR ETF (XLK): ETF Research Reports Vanguard Information Technology ETF (VGT): ETF Research Reports PDD Holdings Inc. Sponsored ADR (PDD): Free Stock Analysis Report DoorDash, Inc. (DASH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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