Launched on October 24, 2024, the iShares Nasdaq Top 30 Stocks ETF (QTOP Quick QuoteQTOP - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $201.55 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.

Why Large Cap Growth

Companies that fall in the large cap category tend to 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.

Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. 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.

Costs

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 0.2%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.38%.

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.

This ETF has heaviest allocation to the Information Technology sector -- about 54.8% of the portfolio. Telecom and Consumer Discretionary round out the top three.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 12.29% of total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).

The top 10 holdings account for about 67.77% of total assets under management.

Performance and Risk

QTOP seeks to match the performance of the NASDAQ-100 TOP 30 INDEX before fees and expenses. The Nasdaq-100 Top 30 Index composes of the 30 largest companies by market capitalization within the Nasdaq 100 Index.

The ETF has added about 20.97% so far. In the past 52-week period, it has traded between $21.09 and $31.70.

With about 35 holdings, it has more concentrated exposure than peers.

Alternatives

iShares Nasdaq Top 30 Stocks ETF 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, QTOP is an excellent 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 Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $197.34 billion in assets, Invesco QQQ has $391.85 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.2%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.