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Is Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) is a smart beta exchange traded fund launched on 03/21/2012.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Direxion. QQQE has been able to amass assets over $462.99 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 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%.
It has a 12-month trailing dividend yield of 0.92%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 39.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Atlassian Corp Plc (TEAM - Free Report) accounts for about 1.29% of the fund's total assets, followed by Constellation Energy Corp (CEG - Free Report) and Mercadolibre Inc Usd 0.001 (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 added about 5.93% and is down about -15.85% so far this year and in the past one year (as of 01/18/2023), respectively. QQQE has traded between $58.71 and $79.27 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 28.19% 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 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 - 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 $71.68 billion in assets, Invesco QQQ has $152.30 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?
Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Direxion NASDAQ100 Equal Weighted Index Shares (QQQE - Free Report) is a smart beta exchange traded fund launched on 03/21/2012.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Direxion. QQQE has been able to amass assets over $462.99 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 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%.
It has a 12-month trailing dividend yield of 0.92%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 39.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Atlassian Corp Plc (TEAM - Free Report) accounts for about 1.29% of the fund's total assets, followed by Constellation Energy Corp (CEG - Free Report) and Mercadolibre Inc Usd 0.001 (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 added about 5.93% and is down about -15.85% so far this year and in the past one year (as of 01/18/2023), respectively. QQQE has traded between $58.71 and $79.27 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 28.19% 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 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 - 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 $71.68 billion in assets, Invesco QQQ has $152.30 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.