Making its debut on 03/21/2012, smart beta exchange traded fund Direxion NASDAQ100 Equal Weighted Index Shares (
QQQE Quick Quote QQQE - Free Report) provides investors 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Direxion, and has been able to amass over $742.67 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, this particular fund 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
The fund has a 12-month trailing dividend yield of 0.70%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 43.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Atlassian Corp Plc (
TEAM Quick Quote TEAM - Free Report) accounts for about 1.29% of total assets, followed by Constellation Energy Corp ( CEG Quick Quote CEG - Free Report) and Mercadolibre Inc Usd 0.001 ( MELI Quick Quote MELI - Free Report) .
Its top 10 holdings account for approximately 11.73% of QQQE's total assets under management.
Performance and Risk
The ETF has lost about -21.87% and is down about -19.11% so far this year and in the past one year (as of 09/15/2022), respectively. QQQE has traded between $60.80 and $90.09 during this last 52-week period.
The fund has a beta of 1.05 and standard deviation of 26.90% for the trailing three-year period, which makes QQQE a medium risk choice in this particular space. With about 103 holdings, it effectively diversifies company-specific risk.
Direxion NASDAQ100 Equal Weighted Index Shares is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
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 $73.07 billion in assets, Invesco QQQ has $161.34 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.