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

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

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

QTEC is managed by First Trust Advisors, and this fund has amassed over $2.67 billion, which makes it one of the larger ETFs in the Technology ETFs. This particular fund, 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.55%.

It has a 12-month trailing dividend yield of 0.00%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

For QTEC, it has heaviest allocation in the Information Technology sector --about 86.6% of the portfolio --while Telecom and Consumer Discretionary round out the top three.

When you look at individual holdings, Datadog, Inc. (class A) (DDOG) accounts for about 2.57% of the fund's total assets, followed by Synopsys, Inc. (SNPS) and Applied Materials, Inc. (AMAT).

Story ContinuesThe top 10 holdings account for about 23.9% of total assets under management.

Performance and Risk

Year-to-date, the First Trust NASDAQ-100-Technology Sector ETF return is roughly 12.71% so far, and it's up approximately 19.06% over the last 12 months (as of 08/11/2025). QTEC has traded between $149.56 and $218.81 in this past 52-week period.

The ETF has a beta of 1.25 and standard deviation of 28.20% 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 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 $84.79 billion in assets, Vanguard Information Technology ETF has $99.8 billion. XLK has an expense ratio of 0.08% and VGT changes 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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First Trust NASDAQ-100-Technology Sector ETF (QTEC): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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