Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?

Designed to provide broad exposure to the Technology ETFs category of the market, the First Trust NASDAQ-100-Technology Sector ETF (QTEC) is a smart beta exchange traded fund launched on 04/19/2006.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.

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 $2.63 billion, this makes it one of the larger ETFs in the Technology ETFs. QTEC is managed by First Trust Advisors. QTEC, 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.

Annual operating expenses for QTEC are 0.57%, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0.02%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 91.50% of the portfolio.

When you look at individual holdings, Palantir Technologies Inc. (class A) (PLTR) accounts for about 3.08% of the fund's total assets, followed by Microstrategy Incorporated (class A) (MSTR) and Crowdstrike Holdings, Inc. (class A) (CRWD).

The top 10 holdings account for about 26.05% of total assets under management.

Performance and Risk

Year-to-date, the First Trust NASDAQ-100-Technology Sector ETF return is roughly 9.34% so far, and it's up approximately 7.49% over the last 12 months (as of 06/11/2025). QTEC has traded between $149.56 and $210.67 in this past 52-week period.

The fund has a beta of 1.24 and standard deviation of 29.34% for the trailing three-year period, which makes QTEC a high risk choice in this particular 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 $75.12 billion in assets, Vanguard Information Technology ETF has $88.94 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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This article originally published on Zacks Investment Research (zacks.com).

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