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Invesco QQQ Outperforms on the Power of Innovation .

Nasdaq celebrates QQQ’s 20th anniversary

Invesco QQQ Outperforms on the Power of Innovation

QQQ

The Invesco QQQ, which is the largest exchange-traded fund (ETF) that tracks the Nasdaq-100 index, turns 20 years old, marking a milestone for one of the most traded ETFs in the U.S.

With approximately $66 billion in assets, QQQ is widely considered a cornerstone ETF in the market. The fund is the sixth-largest ETF, and over the past year, the average daily value traded was $7.6 billion per day, according to Bloomberg data as of the end of February. Those volumes combined with the second lowest bid/ask spread among the U.S.-listed ETFs, make QQQ one of the most liquid ETFs in the U.S. 

“It started out as an incredible innovation at the time – and people were wondering if it’s going work and if it’s going to be successful. Twenty years later with $66 billion [in AUM], it’s been amazing for the investors,” Martin Flanagan, the chief executive officer of Invesco, said on CNBC.

The QQQ tracks the Nasdaq-100, which consists of the 100 largest non-financial companies on the Nasdaq, and many constituents have demonstrated robust revenue, earnings and dividend growth. The fund has outperformed the S&P 500 Index over the past decade. More specifically, QQQ’s underlying index has beat the S&P 500 Index 86.8% of the time and the Russell 1000 Growth Index 92.4% of the time on a 10-year monthly rolling basis, according to Invesco, citing Bloomberg data.  

“There was nothing else out there that you could just buy like that to get that exposure to technology stocks. All these new dot-coms were listing on the Nasdaq. People were just thinking, ‘This is the place to be,’” Bruce Bond, co-founder and former CEO of PowerShares, which is now owned by Invesco, told the Wall Street Journal. “That’s the reason the Qs became such a huge brand.”

Moreover, as the Nasdaq-100 features many prominent tech names, including Microsoft (MSFT) and Apple (APPL), QQQ companies have “historically invested a higher percentage of sales in [research and development] – providing the potential for cutting-edge product innovation and sustainable earnings growth,” Invesco said.  

Ten-year cumulative growth rates across revenue, earnings and dividends averaged 349% for the Nasdaq-100 Index, which was 6.8x higher than the S&P 500 Index and 3.8x higher than the Russell 1000 Growth Index, according to Invesco.

While the tech allocation is high, about 60% of the fund is non-tech, featuring companies like PepsiCo Inc. (PEP) and Costco Wholesale Corp. (COST).

For those looking to invest in innovation, the RIAChannel.com along with Nasdaq and Invesco will host a webinar the topic. Register here for the event.  


Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc.  nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

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