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Is First Trust NASDAQ100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
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The First Trust NASDAQ100 Equal Weighted ETF (QQEW - Free Report) made its debut on 04/19/2006, and is a smart beta exchange traded fund that provides 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.01 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. QQEW, before fees and expenses, seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
The NASDAQ-100 Equal Weighted Index is the equal-weighted version of the NASDAQ-100 Index which includes 100 of the largest non-financial securities listed on NASDAQ based on market capitalization.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.43%.
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.
Representing 41.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Splunk Inc. accounts for about 1.04% of the fund's total assets, followed by Advanced Micro Devices, Inc. (AMD - Free Report) and Csx Corporation (CSX - Free Report) .
Its top 10 holdings account for approximately 10.14% of QQEW's total assets under management.
Performance and Risk
The ETF has lost about -23.95% so far this year and is down about -12.64% in the last one year (as of 05/20/2022). In the past 52-week period, it has traded between $87.97 and $120.91.
The fund has a beta of 1.05 and standard deviation of 25.76% for the trailing three-year period, which makes QQEW a medium risk choice in this particular space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ100 Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $66.83 billion in assets, Invesco QQQ has $157.10 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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Is First Trust NASDAQ100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
The First Trust NASDAQ100 Equal Weighted ETF (QQEW - Free Report) made its debut on 04/19/2006, and is a smart beta exchange traded fund that provides 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.01 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. QQEW, before fees and expenses, seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
The NASDAQ-100 Equal Weighted Index is the equal-weighted version of the NASDAQ-100 Index which includes 100 of the largest non-financial securities listed on NASDAQ based on market capitalization.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.43%.
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.
Representing 41.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Splunk Inc. accounts for about 1.04% of the fund's total assets, followed by Advanced Micro Devices, Inc. (AMD - Free Report) and Csx Corporation (CSX - Free Report) .
Its top 10 holdings account for approximately 10.14% of QQEW's total assets under management.
Performance and Risk
The ETF has lost about -23.95% so far this year and is down about -12.64% in the last one year (as of 05/20/2022). In the past 52-week period, it has traded between $87.97 and $120.91.
The fund has a beta of 1.05 and standard deviation of 25.76% for the trailing three-year period, which makes QQEW a medium risk choice in this particular space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ100 Equal Weighted ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $66.83 billion in assets, Invesco QQQ has $157.10 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.