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Is First Trust NASDAQ-100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
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Making its debut on 04/19/2006, smart beta exchange traded fund First Trust NASDAQ-100 Equal Weighted ETF (QQEW - 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by First Trust Advisors, and has been able to amass over $1.69 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for QQEW are 0.57%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.58%.
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.
For QQEW, it has heaviest allocation in the Information Technology sector --about 37.30% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Regeneron Pharmaceuticals, Inc. (REGN - Free Report) accounts for about 1.08% of total assets, followed by Intuitive Surgical, Inc. (ISRG - Free Report) and Lucid Group, Inc. (class A) (LCID - Free Report) .
QQEW's top 10 holdings account for about 10.6% of its total assets under management.
Performance and Risk
The ETF return is roughly 14.62% so far this year and was up about 7.50% in the last one year (as of 06/01/2023). In the past 52-week period, it has traded between $81.64 and $102.27.
QQEW has a beta of 1.05 and standard deviation of 23.06% 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
First Trust NASDAQ-100 Equal Weighted ETF 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 $86.79 billion in assets, Invesco QQQ has $185.95 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 First Trust NASDAQ-100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?
Making its debut on 04/19/2006, smart beta exchange traded fund First Trust NASDAQ-100 Equal Weighted ETF (QQEW - 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by First Trust Advisors, and has been able to amass over $1.69 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for QQEW are 0.57%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.58%.
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.
For QQEW, it has heaviest allocation in the Information Technology sector --about 37.30% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Regeneron Pharmaceuticals, Inc. (REGN - Free Report) accounts for about 1.08% of total assets, followed by Intuitive Surgical, Inc. (ISRG - Free Report) and Lucid Group, Inc. (class A) (LCID - Free Report) .
QQEW's top 10 holdings account for about 10.6% of its total assets under management.
Performance and Risk
The ETF return is roughly 14.62% so far this year and was up about 7.50% in the last one year (as of 06/01/2023). In the past 52-week period, it has traded between $81.64 and $102.27.
QQEW has a beta of 1.05 and standard deviation of 23.06% 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
First Trust NASDAQ-100 Equal Weighted ETF 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 $86.79 billion in assets, Invesco QQQ has $185.95 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.