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.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 6, placing it in top 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.04 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
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 0.19%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 90.50% of the portfolio.
Looking at individual holdings, Pdd Holdings Inc. (adr) (PDD) accounts for about 3.29% of total assets, followed by Intuit Inc. (INTU) and Atlassian Corporation (class A) (TEAM).
The top 10 holdings account for about 29.80% of total assets under management.
Performance and Risk
The ETF has added about 49.15% so far this year and is up about 39.06% in the last one year (as of 11/15/2023). In that past 52-week period, it has traded between $102.26 and $157.31.
The ETF has a beta of 1.16 and standard deviation of 30.95% for the trailing three-year period, making it a high risk choice in the space. With about 39 holdings, it has more concentrated exposure than peers.