ETF Education Report: FIRST TRUST NASDAQ-100-TECHNOLOGY SECTOR INDEX FUND (QTEC)

What this ETF is trying to do

The QTEC ETF focuses on the technology sector. It is designed to track a specific index of technology companies found within the NASDAQ-100. This means the fund holds many different companies that work in tech, such as software, hardware, and semiconductor businesses.

What the numbers show

The current price of one share is $338.85. To understand how the value has changed, we look at different timeframes:

• Year-to-Date (YTD): The price return is approximately 47.19%. The total return is approximately 47.21%.

• One Year: The price return is approximately 45.26%. The total return is approximately 45.28%.

• Three Years: The price return is approximately 134.99%. The total return is approximately 135.11%.

It is important to know the difference between these two numbers. The price return only shows how much the share price itself went up or down. The total return includes both the price change and any distributions (cash payments) made to investors.

Based on an estimated price from roughly one year ago of $233.27, the share price has grown significantly over the last 12 months.

Income and distribution explanation

Some investors look for ETFs that pay them cash regularly. This is called a "distribution yield." For QTEC, the distribution yield is approximately 0.96%. The fund has a distribution frequency described as "irregular" or "less frequent," with one payout recorded in the last 12 months. While this provides some cash, it is much lower than the overall growth seen in the share price.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly over time. StockValueFinder uses an "erosion-risk score" to help monitor this. For QTEC, the erosion score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Top Holdings

The following are some of the top holdings in this portfolio (note that this is a partial list):

• Workday Inc Class A (2.87%)

• DoorDash Inc (2.79%)

• Roper Technologies Inc (2.71%)

• Palo Alto Networks Inc (2.68%)

• Marvell Technology Inc (2.59%)

• Crowdstrike Holdings Inc Class A (2.57%)

• Fortinet Inc (2.57%)

Pros

• The fund has shown strong positive price returns over the last year and three years.

• The erosion-risk measurement is considered "good."

Cons

• The distribution yield is relatively low.

• Because it focuses on the technology sector, its performance is tied to how tech companies perform.

Beginner takeaway

QTEC is a technology-focused ETF that has experienced significant price growth recently. When looking at this fund, remember to distinguish between the share price movement (price return) and the total amount earned including cash payments (total return).