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Is First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) a Hot ETF Right Now?
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Designed to provide broad exposure to the Large Cap ETFs category of the U.S. equity market, the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report) is a smart beta exchange traded fund launched on 04/19/2006.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by First Trust Advisors, QQEW has amassed assets over $546.73 M, making it one of the average sized ETFs in the Large Cap ETFs. 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
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.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.45%.
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.
Representing 42% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Shire Plc (adr) accounts for about 1.24% of the fund's total assets, followed by Ulta Beauty, Inc. (ULTA - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
QQEW's top 10 holdings account for about 11.49% of its total assets under management.
Performance and Risk
QQEW has gained about 3.74% so far this year, and as of 05/14/2018, is up about 13.98% in the last one year. In the past 52-week period, the fund has traded between $52.12 and $63.23.
The ETF has a beta of 1.14 and standard deviation of 15.67% for the trailing three-year period, making it a medium choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ-100 Equal Weighted Index Fund is a reasonable option for investors seeking to outperform the Large Cap ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Growth ETF (IWF - Free Report) tracks Russell 1000 Growth Index and the PowerShares QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. IShares Russell 1000 Growth ETF has $41.74 B in assets, PowerShares QQQ has $62.90 B. IWF has an expense ratio of 0.20% 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 Large Cap ETFs.
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 Index Fund (QQEW) a Hot ETF Right Now?
Designed to provide broad exposure to the Large Cap ETFs category of the U.S. equity market, the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report) is a smart beta exchange traded fund launched on 04/19/2006.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by First Trust Advisors, QQEW has amassed assets over $546.73 M, making it one of the average sized ETFs in the Large Cap ETFs. 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
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.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.45%.
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.
Representing 42% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Shire Plc (adr) accounts for about 1.24% of the fund's total assets, followed by Ulta Beauty, Inc. (ULTA - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
QQEW's top 10 holdings account for about 11.49% of its total assets under management.
Performance and Risk
QQEW has gained about 3.74% so far this year, and as of 05/14/2018, is up about 13.98% in the last one year. In the past 52-week period, the fund has traded between $52.12 and $63.23.
The ETF has a beta of 1.14 and standard deviation of 15.67% for the trailing three-year period, making it a medium choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ-100 Equal Weighted Index Fund is a reasonable option for investors seeking to outperform the Large Cap ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Growth ETF (IWF - Free Report) tracks Russell 1000 Growth Index and the PowerShares QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. IShares Russell 1000 Growth ETF has $41.74 B in assets, PowerShares QQQ has $62.90 B. IWF has an expense ratio of 0.20% 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 Large Cap ETFs.
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.