Looking for broad exposure to the Technology – Broad segment of the equity market? You should consider the First Trust NASDAQ100Technology Sector ETF (QTEC), a passively managed exchange traded fund launched on 04/19/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways 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 8, placing it in top 50%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.86 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 Technology Index is an equal-weighted index based on the securities of the NASDAQ-100 Index that are classified as technology.
Costs
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.
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 0.08%.
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.
Looking at individual holdings, Atlassian Corporation Plc (class A) (TEAM) accounts for about 3.15% of total assets, followed by Advanced Micro Devices, Inc. (AMD) and Cadence Design Systems, Inc. (CDNS).
The top 10 holdings account for about 28.15% of total assets under management.
Performance and Risk
The ETF has gained about 22.10% so far this year and is up roughly 36.05% in the last one year (as of 10/21/2021). In that past 52-week period, it has traded between $115.55 and $169.06.
The ETF has a beta of 1.07 and standard deviation of 30.10% for the trailing three-year period, making it a high risk choice in the space. With about 42 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ100Technology 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 outstanding 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 $46.30 billion in assets, Vanguard Information Technology ETF has $51.39 billion. XLK has an expense ratio of 0.12% and VGT charges 0.10%.
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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