If you're interested in broad exposure to the Technology - Broad segment of the equity market, look no further than the First Trust NASDAQ-100-Technology Sector ETF (QTEC), a passively managed exchange traded fund launched on 04/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 $3.90 billion, making it one of the largest 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 0.04%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 89.60% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Fortinet, Inc. (FTNT) accounts for about 3.46% of total assets, followed by Mongodb, Inc. (MDB) and Workday, Inc. (class A) (WDAY).
The top 10 holdings account for about 29.90% of total assets under management.
Performance and Risk
The ETF has added roughly 7.74% and was up about 31.06% so far this year and in the past one year (as of 09/26/2024), respectively. QTEC has traded between $137.75 and $205.38 during this last 52-week period.
The ETF has a beta of 1.15 and standard deviation of 30.69% for the trailing three-year period, making it a high risk choice in the space. With about 43 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 $69.55 billion in assets, Vanguard Information Technology ETF has $76.53 billion. XLK has an expense ratio of 0.09% 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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Get it free >>First Trust NASDAQ-100-Technology Sector ETF (QTEC): ETF Research Reports
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
Workday, Inc. (WDAY) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
MongoDB, Inc. (MDB) : 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.
