Investing in US tech stocks through First Trust Nasdaq 100 Tech ETF

on Feb 25, 2014
Updated: Feb 27, 2024

Follow Invezz on Telegram, Twitter, and Google News for instant updates > Tuesday, February 25: Technology stocks have rallied in February, boosted by upbeat results as well as the massive Facebook-Whatsapp deal (Facebook share price: Social network giant buys WhatsApp for $19 billion). The NASDAQ-100 Technology Sector index has gained about six percent so far this year with analysts expecting further advances over the coming months.

Technology was the second best performing sector last year with an earnings beat ratio of 85.7 percent and revenue beat ratio of 76.8 percent. Total earnings for the S&P 500 technology companies that have published their results are up by 5.6 percent compared to a year earlier. Revenues for these companies have increased by 5.2 percent. The success has been driven by robust overseas demand, rising global IT spending and a weakening dollar.

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Tech stocks are a popular choice for investors. Instead of individual stock-picking, investors can place a punt on the US tech sector by buying shares in an exchange-traded fund – a mutual fund traded on a stock exchange.
**First Trust NASDAQ-100-Technology Sector Index ETF (NASDAQ:QTEC)**

The QTEC has a Zacks ETF Rank of 1, or ‘strong buy’, and a ‘medium’ risk outlook. It tracks the performance of the Nasdaq-100 Technology Sector index, investing in tech companies that are constituents of the NASDAQ 100 index.
The ETF is well-diversified, holding a basket of 40 securities with no single company making up more than three percent of the basket. Its biggest exposure is to stocks from the semiconductors industry (40.06 percent), followed by software (25.00 percent) and internet (12.32 percent). Telecom equipment, computer services and computer hardware account for the remainder, with single-digit weights.

Because of its equal-weight strategy, performance of the fund is not heavily dependent on the returns of a particular stock or group of stocks. Its top five holdings as of the end of last year were Cisco Systems, NXP Semiconductors, Symantec Corporation, Equinix and Broadcom Corporation.
The QTEC returned 38.12 percent in 2013, beating the S&P 500 Information Technology Index (28.43 percent) and the broad S&P 500 Index (32.39 percent). It has assets of $205 million and an expense ratio of 0.60 percent. It’s thinly traded however, with volumes of about 30,000 shares a day.

**As of 14.10 UTC buy First Trust NASDAQ-100-Technology Sector Index ETF at $37.67.**

**As of 14.10 UTC sell First Trust NASDAQ-100-Technology Sector Index ETF at $37.65.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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