Should Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) Be on Your Investing Radar?
Style Box ETF report for QQQE
The Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) was launched on 03/21/2012, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Direxion. It has amassed assets over $419.23 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies typically 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.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.48%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 42.30% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Moderna Inc (MRNA) accounts for about 1.13% of total assets, followed by Skyworks Solutions Inc (SWKS) and Advanced Micro Devices (AMD).
The top 10 holdings account for about 10.69% of total assets under management.
Performance and Risk
QQQE seeks to match the performance of the NASDAQ-100 Equal Weighted Index before fees and expenses. The 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.
The ETF has added about 16.84% so far this year and it's up approximately 39.39% in the last one year (as of 09/14/2021). In the past 52-week period, it has traded between $61.71 and $87.72.
The ETF has a beta of 1.03 and standard deviation of 24.82% for the trailing three-year period, making it a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Direxion NASDAQ100 Equal Weighted Index Shares 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, QQQE is an outstanding 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 $84.71 billion in assets, Invesco QQQ has $192.94 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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 NASDAQ100 Equal Weighted Index Shares (QQQE): ETF Research Reports
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
Skyworks Solutions, Inc. (SWKS): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
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