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Is Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
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Making its debut on 03/21/2012, smart beta exchange traded fund Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $481.46 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, QQQE 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.35% for QQQE, making it on par with most peer products in the space.
QQQE's 12-month trailing dividend yield is 0.91%.
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.
Representing 40.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Warner Bros Discovery Inc (WBD - Free Report) accounts for about 1.28% of the fund's total assets, followed by Charter Communications Inc (CHTR - Free Report) and Mercadolibre Inc Usd 0.001 (MELI - Free Report) .
QQQE's top 10 holdings account for about 11.52% of its total assets under management.
Performance and Risk
Year-to-date, the Direxion NASDAQ-100 Equal Weighted Index Shares has added roughly 7.70% so far, and is down about -6.95% over the last 12 months (as of 03/20/2023). QQQE has traded between $58.71 and $79.18 in this past 52-week period.
QQQE has a beta of 1.05 and standard deviation of 25.74% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ-100 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 - 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 $77.24 billion in assets, Invesco QQQ has $163.81 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 NASDAQ-100 Equal Weighted Index Shares (QQQE) a Strong ETF Right Now?
Making its debut on 03/21/2012, smart beta exchange traded fund Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $481.46 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, QQQE 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.35% for QQQE, making it on par with most peer products in the space.
QQQE's 12-month trailing dividend yield is 0.91%.
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.
Representing 40.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Warner Bros Discovery Inc (WBD - Free Report) accounts for about 1.28% of the fund's total assets, followed by Charter Communications Inc (CHTR - Free Report) and Mercadolibre Inc Usd 0.001 (MELI - Free Report) .
QQQE's top 10 holdings account for about 11.52% of its total assets under management.
Performance and Risk
Year-to-date, the Direxion NASDAQ-100 Equal Weighted Index Shares has added roughly 7.70% so far, and is down about -6.95% over the last 12 months (as of 03/20/2023). QQQE has traded between $58.71 and $79.18 in this past 52-week period.
QQQE has a beta of 1.05 and standard deviation of 25.74% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ-100 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 - 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 $77.24 billion in assets, Invesco QQQ has $163.81 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.