Another of the oldest exchange traded funds (ETFs) on the market, the Invesco QQQ ETF (QQQ) was launched in 1999 as a way for investors to track the tech-focused NASDAQ-100 index. Now, two decades into its run, QQQ remains in the top 1% of all NASDAQ-focused ETFs in terms of assets under management. As of 2019, QQQ has maintained a top 1% ranking in the Lipper’s Large-Cap Growth Category for the past 10 and 15 years and is the second-most traded ETF in the U.S. based on average daily volume.

QQQ’s holdings are broken down into six categories, each weighted differently. Information technology gets 44.44%, Communications 21.40%, Consumer Discretionary 16.90%, Healthcare 7.98% Consumer Staples 6.07% and Industrials & Utilities 2.83%. Its top holdings include Microsoft (11.21%), Apple (9.95%), Cisco (2.84%), Intel (2.60%, Adobe (1.74%), Paypal (1.63%), Broadcom (1.38%), Texas Instruments (1/31%), Nvidia (1.21%) and Qualcomm (1.12%).

QQQ’s expense ratio is 0.20% and it currently has about $82 billion in assets under management.

Rationale

Naturally, the most direct way to gain exposure to the holdings in QQQ is to buy its listed shares. But there are a number of good reasons for investors to reconsider that approach. There are a number of different versions of the QQQ approach, each with slightly different weightings, and for good reason. The tech-focused NASDAQ is famously volatile, so ETFs that track it generally try to smooth out these ups and downs through more active management and different weightings. Rather than buying QQQ shares themselves, investors interested in a technology ETF that’s either more conservative or more aggressive might consider buying funds that provide exposure to its top-weighted sectors, in order to spread out their investments even more broadly than QQQ does. After all, the return drivers that will benefit QQQ might also benefit other funds that are even more diversified. 

Investing in QQQ

A search on Magnifi suggests that investors can gain access to the NASDAQ-100 via a number of different funds and other ETFs, including those shown below. 

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