Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Invesco NASDAQ 100 ETF (QQQM) is a passively managed exchange traded fund launched on 10/13/2020.
The fund is sponsored by Invesco. It has amassed assets over $ 4.11 billion, making it one of the largest ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that fall into the large cap category tend to have a market capitalization above $ 10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain the same, it is important for investors to pay attention to an ETF’s expense ratio.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.51%.
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.
This ETF has heaviest allocation to the Information Technology sector – about 50.10% of the portfolio. Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 12.56% of total assets, followed by Microsoft Corp (MSFT) and Amazon.com Inc (AMZN).
The top 10 holdings account for about 52.2% of total assets under management.
Performance and Risk
QQQM seeks to match the performance of the NASDAQ-100 INDEX before fees and expenses. The NASDAQ-100 Index includes securities of 100 of the largest domestic and international nonfinancial companies listed on Nasdaq.
The ETF has lost about -17.82% so far this year and is down about -2.30% in the last one year (as of 04/26/2022). In the past 52-week period, it has traded between $ 130.26 and $ 166.07.
The ETF has a beta of 1.09 and a standard deviation of 21.50% for the trailing three-year period. With about 104 holdings, it effectively diversifies company-specific risk.
Invesco NASDAQ 100 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, QQQM is an excellent option for investors seeking exposure to the Style Box – Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $ 76.25 billion in assets, Invesco QQQ has $ 176.90 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.