The PowerShares QQQ (NasdaqGM: QQQ), which tracks the tech heavy Nasdaq-100 Index, is a popular avenue for investors looking for exposure to the technology sector, the best-performing sector in the S&P 500 in 2017.
Though QQQ is not a dedicated technology ETF, the fund is heavy on technology darlings, such as Apple Inc. (NASDAQ: AAPL) and Facebook Inc. (NASDAQ: FB) and investors have recently been flocking to the fund. However, there is a way for investors to isolate the Nasdaq-100’s technology holdings with an exchange traded fund.
Enter the First Trust Nasdaq-100 Tech Index (NasdaqGM: QTEC). The $2 billion QTEC, which turned 11 years old earlier this year, tracks the NASDAQ-100 Technology Sector Index. That index is equally weighted.
“The index consists of companies in the NASDAQ-100 Index classified as Technology according to Industry Classification Benchmark (ICB),” according to First Trust. “The index is reconstituted once a year based on the NASDAQ-100 reconstitution in December, but replacements may be made during the year if there is a replacement in the NASDAQ-100 Index.”
“This is an equal-weighted, not a cap-weighted, fund. The idea of rebalancing every 90 days to keep it balanced means if a particular company shoots way up and another plunges after missing 12-week earnings by a penny a share, the fund is forced to buy more shares of the one that is down and sell some shares of the one that has taken off,” according to a Seeking Alpha analysis of QTEC.