5 things to know about the Invesco QQQ ETF

ETFs or exchange-traded funds are a favorite for investors who want to invest in the US markets. They offer several benefits. First, ETFs let investors diversify their portfolios across different assets, sectors, or themes. Also, they are cost-efficient and are well-suited for long-term investments. For the beginner investor who may not have the expertise to pick individual stocks, ETFs could be a good way to get started with investing in the US. 

In this blog, we will take a look at one of the most popular ETFs in the US- the Invesco QQQ ETF. Launched in 1999, it had Assets Under Management of $172.60 billion as of 11 March 2022. On the same day, the QQQ stock price was $323.34. Here are five things to know about the Invesco QQQ ETF. 

1. It tracks the Nasdaq-100 index

The Invesco QQQ ETF tracks the Nasdaq-100 index. By investing in this ETF, one can invest in the 100 largest domestic and international non-financial companies listed on the Nasdaq. This is an easy way to get such an exposure, as otherwise, one would have to buy all the 100 stocks separately.

2. QQQ holdings include the major tech stocks

The top holdings of the Invesco QQQ ETF consist of some of the largest and the most innovative tech companies in the world such as Apple Inc, Microsoft, Amazon, Tesla, Alphabet, Meta Platforms, and Nvidia. So, by investing in a single ETF, an investor can get exposure to companies that are at the forefront of innovation in long-term themes such as augmented reality, cloud computing, big data, mobile payments, electric vehicles, and more.

3. It is the second most traded ETF in the US

When picking an ETF, one of the things to look out for is the trading volume. Higher trading volumes mean higher liquidity. High liquidity means that you will not face any hurdles when buying/selling the ETF. The QQQ ETF was the 2nd most traded ETF in the US based on trading volumes as of December 31, 2021, with its 30-day average trading volume at 79.90 million.

4. It is not purely a tech fund

The Invesco QQQ ETF is more than a tech fund. Its underlying holdings are spread across multiple sectors and industries. As of December 31, 2021, Information Technology (50.97%), Communication Services (18.38%), Consumer Discretionary (16.13%), Health Care (5.66%), Consumer Staples (5.14%), and Industrials and Utilities (3.65%) werethe sector allocations of the QQQ ETF. 

5. It has a low expense ratio

When investing in an ETF, the total expense ratio (TER) is an important consideration. The TER is the total cost associated with managing the fund. A lower TER means lesser returns are lost in fees. Being a passively managed ETF, the Invesco QQQ has a TER of 0.2%.

When any stocks listed on the Nasdaq gets big, they will find their way into the Nasdaq-100 and into the QQQ ETF. Hence, this could be a good option for those who want to invest in the companies that have grown large and are leaders in their field. However, it is important to consider factors such as risk appetite and asset allocation before investing. 

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Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.

This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.

This video is meant to be informative and not to be taken as an investment advice and may contain certain “forward-looking statements” which may be identified by the use of such words as “believe”, “expect”, “anticipate”, “should”, “planned”, “estimated”, “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success of or lack of success of particular investments (and may include such words as “crash” or “collapse”.) All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.

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