Should Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) Be on Your Investing Radar?
Launched on 03/21/2012, the Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) 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 Direxion. It has amassed assets over $1.07 billion, 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
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
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. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. 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 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.81%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 37.90% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Sirius Xm Holdings Inc (SIRI) accounts for about 1.13% of total assets, followed by Crowdstrike Holdings Inc - A (CRWD) and Zscaler Inc (ZS).
The top 10 holdings account for about 10.87% of total assets under management.
Performance and Risk
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.
The ETF has lost about -2.52% so far this year and is up about 30.95% in the last one year (as of 01/04/2024). In the past 52-week period, it has traded between $63.51 and $85.
The ETF has a beta of 1.07 and standard deviation of 22.22% for the trailing three-year period, making it a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
Direxion NASDAQ-100 Equal Weighted Index Shares 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, QQQE is an outstanding 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 $100.83 billion in assets, Invesco QQQ has $223.78 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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.
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Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE): ETF Research Reports
Sirius XM Holdings Inc. (SIRI) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
Zscaler, Inc. (ZS) : Free Stock Analysis Report
CrowdStrike (CRWD) : Free Stock Analysis Report
