What is QQQ
QQQ, also known as Invesco QQQ ETF, is a widely held exchange-traded fund (ETF) that tracks the Nasdaq 100 index. Nasdaq 100 index consists of 100 largest domestic and international financial companies, and it is based on market capitalization. The QQQ stocks prices go up and down imitating the tech-heavy Nasdaq 100 and there are distinct advantage and disadvantage to investing in it.
QQQ ETF offers investors with big rewards during bullish Nasdaq 100 index, but if the Nasdaq 100 index is bearish investors may face huge losses and has high sector risk, holds no small-cap stocks, and often appears overvalued. The passive management keeps fees low, offers potential for long-term growth and lots of liquidity. It allows investors to invest in largest 100 non-financial companies listed on the Nasdaq 100 Index.
Invesco QQQ ETF, formerly known as the PowerShares QQQ Trust ETF, reflects the performance of technology sector as it is heavily weighted towards large-cap technology companies.
The Nasdaq 100 index is constructed on a modified capitalization methodology that uses individual weights of included items according to their market capitalization. Weighting enables constraints to restrict the impact of the largest companies and valance the index with all members and to achieve this. The index reviews the composition of the index each quarter and adjusts weightings if the distribution requirements are not fulfilled.
QQQ ETF Sectors
The Invesco QQQ ETF tracks various sectors such as information technology, consumer staples, consumer discretionary, industrials, health care and utility sectors. QQQ ETF is rebalanced quarterly and reconstituted annually.
The sector breakdown of the Invesco QQQ ETF as of 18 November 2021 is given in the table below.
Invesco QQQ ETF Sector Breakdown
QQQ ETF Top Holdings
The QQQ ETF delivers exposure to companies that are at forefront of transformative, long term themes such as Cloud Computing, Mobile Payments, Augmented reality, Electric Vehicles, Big Data, Streaming Services and more.
Apple is the most important company in QQQ ETF, and it became the first US Company to hit the market capitalization of US $2 trillion in August 2020. It strategized well and got its consumers into its ecosystem without letting them go. This is achieved by releasing and upselling new versions of old products to achieve growing revenue.
Invesco QQQ ETF top 10 Holdings
QQQ Pros and Cons