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Is Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
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The Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) made its debut on 03/21/2012, 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $436.89 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE, before fees and expenses, seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
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.
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.
Operating expenses on an annual basis are 0.35% for this ETF, which makes 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
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.
For QQQE, it has heaviest allocation in the Information Technology sector --about 42.70% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Moderna Inc (MRNA - Free Report) accounts for about 1.13% of the fund's total assets, followed by Skyworks Solutions Inc (SWKS - Free Report) and Advanced Micro Devices (AMD - Free Report) .
The top 10 holdings account for about 10.69% of total assets under management.
Performance and Risk
The ETF has added about 19.41% and is up about 39.66% so far this year and in the past one year (as of 11/03/2021), respectively. QQQE has traded between $67.17 and $88.26 during this last 52-week period.
QQQE has a beta of 1.02 and standard deviation of 24.44% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ100 Equal Weighted Index Shares is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
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 $88.51 billion in assets, Invesco QQQ has $202.95 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 Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
The Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) made its debut on 03/21/2012, 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $436.89 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE, before fees and expenses, seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
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.
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.
Operating expenses on an annual basis are 0.35% for this ETF, which makes 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
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.
For QQQE, it has heaviest allocation in the Information Technology sector --about 42.70% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Moderna Inc (MRNA - Free Report) accounts for about 1.13% of the fund's total assets, followed by Skyworks Solutions Inc (SWKS - Free Report) and Advanced Micro Devices (AMD - Free Report) .
The top 10 holdings account for about 10.69% of total assets under management.
Performance and Risk
The ETF has added about 19.41% and is up about 39.66% so far this year and in the past one year (as of 11/03/2021), respectively. QQQE has traded between $67.17 and $88.26 during this last 52-week period.
QQQE has a beta of 1.02 and standard deviation of 24.44% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ100 Equal Weighted Index Shares is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
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 $88.51 billion in assets, Invesco QQQ has $202.95 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.