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Should Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) Be on Your Investing Radar?

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Looking for broad exposure to the Large Cap Growth segment of the US equity market? You should consider the Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) , a passively managed exchange traded fund launched on 03/21/2012.

The fund is sponsored by Direxion. It has amassed assets over $647.02 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

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 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 4.42%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 42.10% of the portfolio. Consumer Discretionary and Healthcare round out the top three.

Looking at individual holdings, Activision Blizzard Inc (ATVI - Free Report) accounts for about 1.45% of total assets, followed by Booking Holdings Inc (BKNG - Free Report) and Marriott International -Cl A (MAR - Free Report) .

The top 10 holdings account for about 12.34% of total assets under management.

Performance and Risk

QQQE seeks to match the performance of the NASDAQ-100 Equal Weighted Index before fees and expenses. 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.

The ETF has lost about -12.57% so far this year and is down about -2.63% in the last one year (as of 04/12/2022). In the past 52-week period, it has traded between $68.88 and $90.09.

The ETF has a beta of 1.04 and standard deviation of 24.94% for the trailing three-year period, making it a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.

Alternatives

Direxion NASDAQ100 Equal Weighted Index Shares carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, QQQE is a reasonable option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $77.63 billion in assets, Invesco QQQ has $184.49 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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