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Is First Trust NASDAQ-100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
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Launched on 04/19/2006, the First Trust NASDAQ-100 Equal Weighted ETF (QQEW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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 $2 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.58%.
It's 12-month trailing dividend yield comes in at 0.59%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
QQEW's heaviest allocation is in the Information Technology sector, which is about 34.60% of the portfolio. Its Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Sirius Xm Holdings Inc. (SIRI - Free Report) accounts for about 1.16% of the fund's total assets, followed by Lucid Group, Inc. (class A) (LCID - Free Report) and Old Dominion Freight Line, Inc. (ODFL - Free Report) .
Its top 10 holdings account for approximately 10.86% of QQEW's total assets under management.
Performance and Risk
The ETF return is roughly 21.97% and was up about 6.98% so far this year and in the past one year (as of 08/15/2023), respectively. QQEW has traded between $81.64 and $112.15 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 22.70% 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
First Trust NASDAQ-100 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 $91.84 billion in assets, Invesco QQQ has $203.80 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 NASDAQ-100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
Launched on 04/19/2006, the First Trust NASDAQ-100 Equal Weighted ETF (QQEW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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 $2 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.58%.
It's 12-month trailing dividend yield comes in at 0.59%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
QQEW's heaviest allocation is in the Information Technology sector, which is about 34.60% of the portfolio. Its Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Sirius Xm Holdings Inc. (SIRI - Free Report) accounts for about 1.16% of the fund's total assets, followed by Lucid Group, Inc. (class A) (LCID - Free Report) and Old Dominion Freight Line, Inc. (ODFL - Free Report) .
Its top 10 holdings account for approximately 10.86% of QQEW's total assets under management.
Performance and Risk
The ETF return is roughly 21.97% and was up about 6.98% so far this year and in the past one year (as of 08/15/2023), respectively. QQEW has traded between $81.64 and $112.15 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 22.70% 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
First Trust NASDAQ-100 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 $91.84 billion in assets, Invesco QQQ has $203.80 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.