QTEC: A Smart Beta ETF for Tech Investors

The First Trust NASDAQ-100-Technology Sector ETF (QTEC) is a smart beta ETF launched in 2006 with $2.67 billion in assets. It tracks the NASDAQ-100 Technology Sector Index, which is an equal-weighted index based on the securities of the NASDAQ-100 Index classified as technology. QTEC has an expense ratio of 0.55% and a 12-month trailing dividend yield of 0.00%. The ETF has a heavy allocation to the Information Technology sector and top holdings include Datadog, Synopsys, and Applied Materials.

The First Trust NASDAQ-100-Technology Sector ETF (QTEC) is a smart beta exchange-traded fund (ETF) launched on April 19, 2006, with $2.67 billion in assets under management. It is designed to provide broad exposure to the technology sector of the market. The ETF tracks the NASDAQ-100 Technology Sector Index, which is an equal-weighted index composed of the securities from the NASDAQ-100 Index classified as technology [1].

QTEC is managed by First Trust Advisors and seeks to match the performance of the NASDAQ-100 Technology Sector Index. The ETF has an annual operating expense ratio of 0.55%, which is on par with most peer products in the space. It has a 12-month trailing dividend yield of 0.00% [1].

The ETF has a significant allocation to the Information Technology sector, accounting for approximately 86.6% of the portfolio. The top three holdings include Datadog, Inc. (class A) (DDOG), Synopsys, Inc. (SNPS), and Applied Materials, Inc. (AMAT). These holdings represent about 23.9% of the total assets under management [1].

Performance-wise, QTEC has returned approximately 19.06% over the last 12 months (as of August 11, 2025), and 12.71% year-to-date. The ETF has traded between $149.56 and $218.81 in the past 52 weeks. It has a beta of 1.25 and a standard deviation of 28.20% for the trailing three-year period, indicating higher risk compared to peers [1].

In the context of smart beta ETFs, QTEC offers a non-cap weighted strategy, which aims to pick stocks with better risk-return performance. However, the effectiveness of this strategy varies, and not all smart beta funds have been able to deliver superior results [1].

Investors seeking alternatives to QTEC could consider the Technology Select Sector SPDR ETF (XLK) or the Vanguard Information Technology ETF (VGT). XLK has $84.79 billion in assets and an expense ratio of 0.08%, while VGT has $99.8 billion in assets and an expense ratio of 0.09% [1].

In conclusion, QTEC is a well-established smart beta ETF with a significant allocation to the Information Technology sector. Its performance has been strong, but it comes with higher risk compared to traditional market cap weighted ETFs. Investors should consider their risk tolerance and investment objectives when evaluating this ETF.

References:
[1] https://finviz.com/news/134750/is-first-trust-nasdaq-100-technology-sector-etf-qtec-a-strong-etf-right-now
[2] https://finance.yahoo.com/news/first-trust-nasdaq-100-technology-102002118.html