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Is Direxion NASDAQ-100 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 NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) is a smart beta exchange traded fund launched on 03/21/2012.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $1.28 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE seeks to match the performance of the NASDAQ-100 Equal Weighted Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
QQQE's 12-month trailing dividend yield is 0.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For QQQE, it has heaviest allocation in the Information Technology sector --about 39.80% of the portfolio --while Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Atlassian Corp-Cl A (TEAM - Free Report) accounts for about 1.54% of total assets, followed by Tesla Inc (TSLA - Free Report) and Datadog Inc - Class A (DDOG - Free Report) .
Its top 10 holdings account for approximately 12.62% of QQQE's total assets under management.
Performance and Risk
Year-to-date, the Direxion NASDAQ-100 Equal Weighted Index Shares has added about 7.42% so far, and was up about 7.42% over the last 12 months (as of 12/31/2024). QQQE has traded between $82.13 and $96.24 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 21.61% for the trailing three-year period, making it 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 $155.60 billion in assets, Invesco QQQ has $316.89 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?
Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report) is a smart beta exchange traded fund launched on 03/21/2012.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Direxion, QQQE has amassed assets over $1.28 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. QQQE seeks to match the performance of the NASDAQ-100 Equal Weighted Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
QQQE's 12-month trailing dividend yield is 0.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For QQQE, it has heaviest allocation in the Information Technology sector --about 39.80% of the portfolio --while Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Atlassian Corp-Cl A (TEAM - Free Report) accounts for about 1.54% of total assets, followed by Tesla Inc (TSLA - Free Report) and Datadog Inc - Class A (DDOG - Free Report) .
Its top 10 holdings account for approximately 12.62% of QQQE's total assets under management.
Performance and Risk
Year-to-date, the Direxion NASDAQ-100 Equal Weighted Index Shares has added about 7.42% so far, and was up about 7.42% over the last 12 months (as of 12/31/2024). QQQE has traded between $82.13 and $96.24 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 21.61% for the trailing three-year period, making it 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 $155.60 billion in assets, Invesco QQQ has $316.89 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.