If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the Invesco NASDAQ Next Gen 100 ETF (QQQJ), a passively managed exchange traded fund launched on 10/13/2020.
The fund is sponsored by Invesco. It has amassed assets over $676.63 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. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
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. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.74%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 34% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, United Airlines Holdings Inc (UAL) accounts for about 2.06% of total assets, followed by Ebay Inc (EBAY) and Alnylam Pharmaceuticals Inc (ALNY).
The top 10 holdings account for about 16.6% of total assets under management.
Performance and Risk
QQQJ seeks to match the performance of the NASDAQ NEXT GENERATION 100 INDEX before fees and expenses. The NASDAQ Next Generation 100 Index comprises of securities of the next generation of Nasdaq-listed non-financial companies; that is, the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index.
The ETF has added roughly 3.98% so far this year and was up about 19.67% in the last one year (as of 01/30/2025). In the past 52-week period, it has traded between $26.46 and $32.64.
The ETF has a beta of 1.14 and standard deviation of 22.54% for the trailing three-year period. With about 108 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco NASDAQ Next Gen 100 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, QQQJ is a reasonable 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 $159.38 billion in assets, Invesco QQQ has $326.65 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 >>Invesco NASDAQ Next Gen 100 ETF (QQQJ): ETF Research Reports
Alnylam Pharmaceuticals, Inc. (ALNY) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
eBay Inc. (EBAY) : Free Stock Analysis Report
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.
