A smart beta exchange traded fund, the Direxion NASDAQ100 Equal Weighted Index Shares (
QQQE Quick Quote QQQE - Free Report) debuted on 03/21/2012, and offers broad exposure to the Style Box - Large Cap Growth category of the market. What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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
Because the fund has amassed over $416.54 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE is managed by Direxion. This particular fund, before fees and expenses, seeks to match the performance of the NASDAQ-100 Equal Weighted Index.
The NASDAQ-100 Equal Weighted 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.
The fund has a 12-month trailing dividend yield of 3.88%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 43.60% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Tesla Inc (
TSLA Quick Quote TSLA - Free Report) accounts for about 1.54% of the fund's total assets, followed by Dollar Tree Inc ( DLTR Quick Quote DLTR - Free Report) and Advanced Micro Devices ( AMD Quick Quote AMD - Free Report) .
QQQE's top 10 holdings account for about 12.08% of its total assets under management.
Performance and Risk
The ETF has lost about -1.21% and is up roughly 17.91% so far this year and in the past one year (as of 01/05/2022), respectively. QQQE has traded between $72.55 and $90.09 during this last 52-week period.
QQQE has a beta of 1.02 and standard deviation of 23.77% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 104 holdings, it effectively diversifies company-specific risk.
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 Quick Quote VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $89.64 billion in assets, Invesco QQQ has $215.44 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.
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.