Yahoo Finance Is Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
A smart beta exchange traded fund, the Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) debuted on 03/21/2012, and offers broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.15 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE is managed by Direxion. Before fees and expenses, this particular fund seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
The NASDAQ-100 Equal Weighted Index consists of companies in the NASDAQ-100 Index but each of the securities is initially set at a weight of 1.00% of the Index. The NASDAQ-100 Index includes 100 of the largest non-financial securities listed on NASDAQ based on capitalization.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for QQQE are 0.35%, which makes it on par with most peer products in the space.
QQQE's 12-month trailing dividend yield is 0.91%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For QQQE, it has heaviest allocation in the Information Technology sector --about 38.80% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Nvidia Corp (NVDA) accounts for about 1.65% of the fund's total assets, followed by Meta Platforms Inc-Class A (META) and Advanced Micro Devices (AMD).
Its top 10 holdings account for approximately 12.84% of QQQE's total assets under management.
Performance and Risk
The ETF has lost about -1% and is up about 18.44% so far this year and in the past one year (as of 04/23/2024), respectively. QQQE has traded between $69.17 and $89.46 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 21.54% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ-100 Equal Weighted Index Shares is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $112.21 billion in assets, Invesco QQQ has $241.86 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE): ETF Research Reports
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
