First Trust NASDAQ-100 Ex-Technology Sector Index Fund (QQXT)

The NASDAQ-100 is a household name for one reason: it holds the biggest technology companies on Earth. Apple, Microsoft, Nvidia, Tesla — the list goes on. But what if you like the idea of owning large, high-quality companies that trade on NASDAQ, just without the heavy technology weight? That is where QQXT comes in.

What it actually holds

QQXT takes the NASDAQ-100 Index and removes every stock classified as technology. That instantly shrinks the fund dramatically, because technology makes up roughly 40 to 50 per cent of the NASDAQ-100 by weight. What is left? Healthcare companies (like Eli Lilly or Regeneron), consumer discretionary retailers (Amazon), real-estate firms, media companies (Netflix), industrials, and others. The fund rebalances periodically to match this filtered index.

The sector definition matters. First Trust uses a standard classification scheme to decide what counts as technology and what does not. A semiconductor maker, for example, might be classified as technology or as industrials depending on the scheme. A company that makes both hardware and software might be split across categories. Checking the prospectus tells you exactly which definitions are used and whether the fund actually does what you expect.

Simple and inexpensive

This is a straightforward index fund. No leverage, no swaps, no complex mechanics. The fund holds real stocks, trades like any other ETF, and pays out dividends. The expense ratio is low — comparable to any plain index fund — because all the fund does is track an index. There are no active managers making bets, no daily resets, no derivatives. The only costs beyond the stated expense ratio are the minimal trading spreads incurred when the NASDAQ-100 composition shifts and the fund rebalances to match.

Why remove technology?

The answer depends on who you are. Some investors already own a lot of technology stocks through other holdings and want to add NASDAQ-quality companies without doubling down on that sector. Others think technology stocks are expensive and want to avoid them but still want exposure to large, liquid, growth-oriented companies. A few are hedging — say, someone who works at a big tech company and already owns company stock wants NASDAQ exposure without more tech risk.

The trade-off is stark. Technology has been the NASDAQ-100’s engine for decades. Removing it means you miss out when that sector surges, but you also avoid its crashes. QQXT typically underperforms a full NASDAQ-100 ETF over long periods, but with materially lower volatility and technology-sector concentration.

The real question

You are choosing between two things: the upside you give up by excluding the market’s biggest growth driver, versus the peace of mind from not having half your large-cap portfolio in one sector. Over many market cycles, technology wins. But in a technology downturn, QQXT wins. Neither outcome is certain; the choice is whether you can live with missing the gains if tech soars.

To decide whether QQXT fits your situation, check the fund’s fact sheet to see the current sector breakdown and top holdings. Run the numbers: compare rolling three-year and five-year returns to a plain NASDAQ-100 ETF over the past decade. Look at what the fund held during the 2022 technology downturn versus recent years when tech surged. That history shows you the actual trade-off in real money terms. Then decide whether the concentration reduction is worth the likely underperformance.