If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the Fidelity Nasdaq Composite Index ETF (ONEQ), a passively managed exchange traded fund launched on 09/25/2003.
The fund is sponsored by Fidelity. It has amassed assets over $7.07 billion, making it one of the larger 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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.21%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.62%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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 50.40% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 11.78% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).
The top 10 holdings account for about 58.45% of total assets under management.
Performance and Risk
ONEQ seeks to match the performance of the NASDAQ Composite Index before fees and expenses. The Nasdaq Composite Index is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange.
The ETF return is roughly 24.53% so far this year and it's up approximately 46.74% in the last one year (as of 10/31/2024). In the past 52-week period, it has traded between $51.44 and $73.77.
The ETF has a beta of 1.11 and standard deviation of 22.96% for the trailing three-year period, making it a medium risk choice in the space. With about 1048 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity Nasdaq Composite Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, ONEQ is a good 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 $144.22 billion in assets, Invesco QQQ has $299.80 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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Invesco QQQ (QQQ): ETF Research Reports
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.
