If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the First Trust NASDAQ100 Equal Weighted ETF (
QQEW Quick Quote QQEW - Free Report) , a passively managed exchange traded fund launched on 04/19/2006.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.12 billion, 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 typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.57%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 44.20% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Datadog, Inc. (class A) (
DDOG Quick Quote DDOG - Free Report) accounts for about 1.15% of total assets, followed by Okta, Inc. ( OKTA Quick Quote OKTA - Free Report) and Zscaler, Inc. ( ZS Quick Quote ZS - Free Report) .
The top 10 holdings account for about 10.79% of total assets under management.
Performance and Risk
QQEW seeks to match the performance of the NASDAQ-100 Equal Weighted Index before fees and expenses. 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.
The ETF has lost about -21.98% so far this year and is down about -19.93% in the last one year (as of 09/15/2022). In the past 52-week period, it has traded between $84.27 and $120.91.
The ETF has a beta of 1.05 and standard deviation of 26.85% 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.
First Trust NASDAQ100 Equal Weighted ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, QQEW 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 Quick Quote VUG - Free Report) and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $73.07 billion in assets, Invesco QQQ has $161.34 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.