Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) is a passively managed exchange traded fund launched on 03/21/2012.
The fund is sponsored by Direxion. It has amassed assets over $1.28 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 usually 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. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 0.84%.
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 40.70% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Diamondback Energy Inc (FANG) accounts for about 1.09% of total assets, followed by Constellation Energy (CEG) and Broadcom Inc (AVGO).
The top 10 holdings account for about 10.53% 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 gained about 1.87% so far this year and is up roughly 9.75% in the last one year (as of 01/16/2025). In the past 52-week period, it has traded between $82.41 and $96.24.
The ETF has a beta of 1.03 and standard deviation of 21.51% for the trailing three-year period, making it a medium risk choice in the space. With about 102 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 $157.29 billion in assets, Invesco QQQ has $321.60 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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Get it free >>Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE): ETF Research Reports
Constellation Energy Corporation (CEG) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
