First Trust Advisors 13F Portfolio

The biggest statement this quarter is the decision to bulk up on systematic tech exposure. QTEC jumps by roughly $812.2M and a new $809.3M position in FXL appears; together they consume close to 1% of the reported book, effectively outsourcing a chunk of stock‑picking risk to rules-based tech factor baskets.

Under the hood, they’re not abandoning stock selection. They push Microsoft, Alphabet, Apple and Meta meaningfully higher, and add to NVIDIA and Micron. That’s a clear vote that the core AI stack and data center demand still have legs, but they want the idiosyncratic risk diluted by ETF wrappers.

The other clear build is in the physical and operational infrastructure that will transmit, house, and monetize those bits:

• PWR (Quanta Services) nearly doubles, up 93.8%, now a 0.82% stake worth $1.40B.
• ETN (Eaton) climbs 36.1%, leveraging power management’s role in grid and data center spend.
• JCI (Johnson Controls) is up 46.4%, positioning for smarter buildings and HVAC digitization.
• STRL, VLTO, MLI and ADP all see meaningful adds, extending the theme into construction, water/analytics, metal components, and business services.

Finally, they quietly build ballast in Finance. Cincinnati Financial is up 97.0%, while BAC and USB rise 19.5% and 36.4%. That looks like classic cycle hedging: monetize growth winners and recycle into banks and insurers that can benefit from still‑elevated rates and nominal GDP.

On the sell side, First Trust is clearly cooling on the most speculative parts of its software book. CrowdStrike is cut by 26.5% even as it sits at a loss versus their average buy, while Datadog falls 24.6%. Those aren’t victory laps; they’re risk-control trades saying, in effect, that not every high‑multiple security vendor will monetize the AI narrative.

Cybersecurity broadly isn’t being abandoned — they still retain substantial PANW and FTNT exposure — but even there, the tone is more harvest than chase. Palo Alto Networks is trimmed 18.7% and Fortinet 6.0%; they’re clipping gains after huge upside from their entry prices, not adding into strength.

In semis and hardware, they’re pruning around the edges rather than exiting the theme:

• LRCX is cut 14.4%, KLAC 5.6%, MPWR 18.4%, AMAT 4.9%, and TXN 7.3%.
• These were multi‑bagger positions versus cost; sizing down reduces single‑name cyclicality while preserving exposure.

The most telling funding move is inside their own ETF shelf. FTXL, a First Trust semiconductor ETF, is slashed 35.0% (about $438.1M freed). That cash effectively migrates into QTEC and FXL — a rotation from pure chips toward broader, more balanced tech factor baskets that keep the theme but soften the blow if the cycle turns.

Despite all the trimming, technology remains the center of gravity at 54.69% of the top‑50, but the shape of that exposure is changing. The small step down from 58.9% isn’t a retreat from tech; it’s a move away from narrow, idiosyncratic bets toward factor products and systemically important platforms.

The beneficiaries are exactly where you’d expect if you think about AI and digitization leaking into the real world. Industrials jump from 9.72% to 11.82%, led by PWR, ETN, JCI, STRL, MLI, VLTO and FIX — all levered to power, construction, infrastructure and building systems. These are the contractors and component makers that physically implement data centers, EV infrastructure, and smart facilities.

Finance also inches up, from 4.31% to 5.26%, with CINF, BAC, USB and a still‑sizable JPM stake. That signals respect for rate and credit risk, even in a growth‑heavy book. Consumer Discretionary ticks down to 7.28% from 7.72% as they modestly ease off AMZN, ROST and hold COST and WSM — a quiet acknowledgement that the US consumer is no longer a free option.

Telecom and networking (CSCO, ANET, VZ) are roughly steady at 7.46% versus 7.82%, reinforcing the thesis that bandwidth and connectivity are not optional in this stack. Energy (CVX) shrinks slightly to 1.21%, consistent with the idea that the big upside is in electrification infrastructure rather than old‑world hydrocarbons.

Taken together, this 13F says First Trust no longer wants to win the AI trade by owning the flashiest line item on a hedge fund tear sheet. They want to win by owning the ecosystem: the chips, the power systems, the networks, the cloud incumbents, and the quietly recurring services and financials around them.

Doubling down on QTEC and launching FXL inside the book hard‑codes that philosophy. Instead of betting that they can consistently out‑pick the market on which mid‑cap SaaS name wins, they’re anchoring to diversified tech factor exposures and then layering active tilts into high‑conviction platforms like MSFT, GOOGL, META, NVDA and AVGO.

The ramp in Industrials and steady build in Finance show how they expect the next leg of the cycle to play out. More grid and building capex, more infrastructure and construction tied to data centers and electrification, and financials that can earn through a still‑unsettled rate environment form the ballast under a still‑aggressive growth core.

If the last three years of 26.14% annualized returns were driven by catching the AI wave early, this quarter suggests the next three will depend on navigating its diffusion into the broader economy. That means less obsession over which single security vendor or SaaS logo wins, and more focus on owning the plumbing — in both silicon and concrete — that everyone will need regardless.