Should Direxion NASDAQ100 Equal Weighted Index Shares (QQQE) Be on Your Investing Radar?

Entrepreneurs News


This story originally appeared on Zacks

Looking for broad exposure to the Large Cap Growth segment of the US equity market? You should consider the Direxion NASDAQ100 Equal Weighted Index Shares (QQQE), a passively managed exchange traded fund launched on 03/21/2012.

– Zacks

The fund is sponsored by Direxion. It has amassed assets over $ 408.74 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 find themselves in the large cap category typically 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.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Further, growth stocks have a higher level of volatility associated with them. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.

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 4.28%.

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 43.60% of the portfolio. Consumer Discretionary and Healthcare round out the top three.

Looking at individual holdings, Tesla Inc (TSLA) accounts for about 1.54% of total assets, followed by Dollar Tree Inc (DLTR) and Advanced Micro Devices (AMD).

The top 10 holdings account for about 12.08% 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 -10.31% so far this year and is up about 1.36% in the last one year (as of 02/08/2022). In the past 52-week period, it has traded between $ 72.55 and $ 90.09.

The ETF has a beta of 1.04 and standard deviation of 24.06% for the trailing three-year period, making it a medium risk choice in space. With about 104 holdings, it effectively diversifies company-specific risk.

Alternatives

Direxion NASDAQ100 Equal Weighted Index Shares carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, QQQE is a sufficient option for those seeking exposure to the Style Box – Large Cap Growth area of ​​the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $ 80.47 billion in assets, Invesco QQQ has $ 189.09 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.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Direxion NASDAQ100 Equal Weighted Index Shares (QQQE): ETF Research Reports

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

Dollar Tree, Inc. (DLTR): Free Stock Analysis Report

Tesla, Inc. (TSLA): Free Stock Analysis Report

Invesco QQQ (QQQ): ETF Research Reports

Vanguard Growth ETF (VUG): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research



Source link

Leave a Reply

Your email address will not be published.