Invesco QQQ (QQQ - Free Report) , which tracks the Nasdaq 100 Index, has been the second-most heavily traded ETF among investors behind only the SPDR S&P 500 ETF Trust (SPY - Free Report) . It is the fifth-largest ETF listed in the United States, with nearly $135 billion in AUM. QQQ has been on high demand buoyed by a technology craze as the pandemic led to a global digital shift for everything ranging from remote working to entertainment, and shopping (read: Nasdaq's Best Third Quarter in 10 Years: Best ETFs & Stocks).
The fund has been witnessing extreme flows in 20 years lately. Per the data compiled by Bloomberg, QQQ has seen an average of $1.5 billion per day inflows over the past month. It posted its biggest withdrawal in two decades in late September, followed by its largest influx in the same time period a day later. The ETF had lured $3 billion the following week, ahead of a $3 billion exit the next day. This week brought another $3.7 billion inflow in a single day.
In order to capitalize the strong demand and the current global trend, Invesco came up with a twist to the QQQ ETF. The issuer launches four variations to more than 20-year old ETF - Invesco NASDAQ 100 ETF QQQM, Invesco NASDAQ Next Gen 100 ETF QQQJ, Invesco NASDAQ-100 Growth Leaders Portfolio QQQG, and a mutual fund Invesco NASDAQ 100 Index Fund IVNQX at cheaper price compared to plain-vanilla QQQ.
Let’s look into the objective and fundamentals of the newly launched ETFs:
QQQM in Focus
This fund is identical to QQQ tracking the NASDAQ-100 Index but comes with 5 bps annual lower fees. It holds 105 securities in its basket with information technology dominating the portfolio at 48.3%. Consumer discretionary and communication services take the next spots at 19% share each. Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) are the top three holdings with a double-digit exposure each while other firms account for no more than 4.2% of assets (read: ETFs to Gain on Apple's New 5G iPhones, Analysts Optimism).
QQQJ in Focus
This fund offers exposure to the innovative mid-cap companies that are using technology in innovative ways or creating competitive advantages across multiple sectors and industries. It follows the NASDAQ Next Generation 100 Index, which comprises the "next 100" nonfinancial Nasdaq-listed companies. QQQJ offers investors another universe of growth names that have been known to feed stocks to the Nasdaq-100 over time.
The fund holds a well-diversified basket of 97 stocks with none accounting for more than 2.7% share. Okta Inc (OKTA - Free Report) , Marvell Technology Group (MRVL - Free Report) and Trade Desk Inc (TTD - Free Report) are the top three elements in the basket. Information technology is the top sector with 46.1% share, followed by healthcare (19.4%), communication services (10.6%) and consumer discretionary (10.5%). This ETF also comes with 0.15% in expense ratio (read: 4 Top ETFs, Stocks From Attractive Sectors Pre Q3 Earnings).
QQQG in Focus
This is an actively managed ETF offering exposure to companies in the Nasdaq 100 Index that have screened based on fundamental factors including relative valuations such as price/earnings, price/cash flow, price/sales, and price/book; growth prospects of sales, earnings, and cash flows; cash flow generation; balance sheet strength and third party analysts ratings. This unit investment trust is suitable for investors interested in a defined scheduled maturity date and more targeted fundamental exposure.
IVNQX in Focus
This is a mutual fund aimed at retirement-account investors who may not be able to hold ETFs.
With these newly launched funds, Invesco QQQ Innovation Suite acts as a “one stop shop” for the NASDAQ-100 companies, plus exposure to the next 100 up-and-coming innovators. However, this is not the first time the junior version of the ETF has been launched. In 2009, Van Eck, on the back of the successful Gold Miners ETF (GDX - Free Report) , launched its Junior Gold Miners ETF (GDXJ - Free Report) .
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