Designed to provide broad exposure to the Technology - Broad segment of the equity market, the First Trust NASDAQ-100-Technology Sector ETF (QTEC) is a passively managed exchange traded fund launched on 04/19/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.91 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Broad segment of the equity market. QTEC 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.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.
It 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 90.30% of the portfolio.
Looking at individual holdings, Broadcom Inc. (AVGO) accounts for about 2.44% of total assets, followed by Microchip Technology Incorporated (MCHP) and Globalfoundries Inc. (GFS).
The top 10 holdings account for about 23.60% of total assets under management.
Performance and Risk
So far this year, QTEC return is roughly 4.10%, and was up about 6.27% in the last one year (as of 01/30/2025). During this past 52-week period, the fund has traded between $169.92 and $205.38.
The ETF has a beta of 1.14 and standard deviation of 30.24% 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 holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, QTEC is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that 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 $73.10 billion in assets, Vanguard Information Technology ETF has $84.49 billion. XLK has an expense ratio of 0.09% and VGT charges 0.10%.
Bottom Line
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First Trust NASDAQ-100-Technology Sector ETF (QTEC): ETF Research Reports
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
GlobalFoundries Inc. (GFS) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
