If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the Invesco QQQ (
QQQ Quick Quote QQQ - Free Report) , a passively managed exchange traded fund launched on 03/10/1999.
The fund is sponsored by Invesco. It has amassed assets over $166.60 billion, making it the largest 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. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
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. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
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 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.71%.
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 49.30% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corp (
MSFT Quick Quote MSFT - Free Report) accounts for about 12.46% of total assets, followed by Apple Inc ( AAPL Quick Quote AAPL - Free Report) and Amazon.com Inc ( AMZN Quick Quote AMZN - Free Report) .
The top 10 holdings account for about 51.41% of total assets under management.
Performance and Risk
QQQ seeks to match the performance of the NASDAQ-100 Index before fees and expenses. The Nasdaq-100 Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.
The ETF has gained about 15.51% so far this year and is down about -15.24% in the last one year (as of 03/29/2023). In the past 52-week period, it has traded between $260.10 and $369.30.
The ETF has a beta of 1.11 and standard deviation of 26% for the trailing three-year period, making it a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Invesco QQQ holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, QQQ is a great option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Growth ETF (
IWF Quick Quote IWF - Free Report) and the Vanguard Growth ETF ( VUG Quick Quote VUG - Free Report) track a similar index. While iShares Russell 1000 Growth ETF has $61.01 billion in assets, Vanguard Growth ETF has $77.69 billion. IWF has an expense ratio of 0.18% and VUG charges 0.04%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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.