QQQ Is Far More Than A Technology-Driven Juggernaut

etfs flow 600X300David Fabian:  The PowerShares QQQ (NASDAQ:QQQ) is based on the NASDAQ-100 Index, which measures the 100 largest non-financial stocks currently trading on the NASDAQ exchange. Whether by design or practical experience, this index and its affiliated ETF have always been associated with the technology sector.

The truth is that many technology companies have historically picked the NASDAQ exchange as their home base. Because QQQ culls its underlying holdings from this pool, there is a natural tendency to be overweight the cream of the crop in the technology field.

However, when you dig beneath the surface, this unique group of stocks actually offers far more than just a one-dimensional focus. Over the years, QQQ has evolved to include a broader depth of sector dispersion as market dynamics, M&A activity, and other growing trends have taken hold.

Understanding its nuances can unveil attractive characteristics for investors looking to capitalize on a diversified array of top growth stocks.

Today’s QQQ

The current sector makeup of QQQ is 55% technology, 20% consumer discretionary, 14% healthcare, 7% consumer staples, and a small fraction in industrials. Top holdings in this ETF include: Apple Inc (AAPL), Microsoft Corp (MSFT), and Amazon.com Inc (AMZN). Together these three stocks make up over 25% of the total portfolio, with AAPL garnering 12.65% of the overall weight.

Fun fact: According to Wikipedia, AAPL is one of only four original components of the NASDAQ-100 Index since its debut in 1985. The other three are Costco Wholesale Corp (COST), Intel Corp (INTC), and PACCAR Inc (PCAR).

Many of the top stocks in QQQ can be found in specialized sector funds such as theTechnology Select Sector SPDR (XLK). However, the real value in this index is its diversification into other realms such as biotechnology, social media, e-commerce, and other consumer-driven themes. Health care in particular has been a strong momentum area of the market over the last several years and continues to be a performance differentiator for QQQ.

In addition, the underlying holdings in this ETF are not solely U.S.-based stocks. Many publicly traded international companies such as Baidu Inc (BIDU) and JD.com Inc (JD) are represented in the index as well. This broader diversification has prompted QQQ to become one of the top baskets that market experts monitor on a daily basis.

To date, this juggernaut has accumulated $39 billion in total assets and charges an expense ratio of 0.20%. While the QQQ expense ratio is slightly higher than an equivalent S&P 500 Index fund, the embedded cost is still in a reasonable realm for a market-cap weighted ETF.

(…)Click here to continue reading the original ETFDailyNews.com article: QQQ Is Far More Than A Technology-Driven Juggernaut
You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)