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QQQ: Superstar ETF of the Decade; Here's Why

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In this episode of ETF Spotlight, I speak with Ryan McCormack, QQQ Strategist at Invesco. We talk about the Invesco QQQ ETF (QQQ - Free Report) , which is one of the most popular ETFs in the world, with over $96 billion in assets. It is also one of the best performing ETFs of the past decade and continues to lead the market this year as well.

The ETF, often called “the Qs,” will celebrate its 21st birthday next month. Most investors think of QQQ as a tech focused ETF, whereas it is actually a large cap growth ETF, holding many highly innovative and strong companies in other sectors too. It is comprised of the 100 largest nonfinancial companies that trade on the Nasdaq.

We discuss what factors are contributing to QQQ’s impressive performance. The ETF’s heavy weighting in technology and communications services has paid off in the past. Technology was the best performing sector last year, up more than 50%. Can the ETF continue to benefit from these weighting in the future?

Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Facebook are QQQ’s top holdings. Most of these companies reported excellent quarterly results recently and are now trading near their new record highs.

As investors believe these rapidly growing companies can continue to deliver robust sales and earnings growth even if the economy slows down, they have been pouring money into these stocks. Per Invesco, QQQ companies have invested two times more in R&D than companies in competing indexes.

How does QQQ fit into an investor’s portfolio?

The Nasdaq-100 is the only major index that includes Tesla (TSLA - Free Report) , even though the weighting is rather small. We also discuss Tesla’s parabolic move.

To learn more about this ETF, please visit Invesco.com. Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

Disclosure: I own shares of AAPL, MSFT, AMZN, GOOGL and FB in my personal portfolio.


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