Exchange Traded Funds (ETFs)

Tracking the Nasdaq 100 With An Equal Weighted Index Fund

For investors looking for equal-weighted exposure to the Nasdaq 100, the First Trust Nasdaq-100 Equal Weighted Index Fund (NASDAQ: QQEW) may be of interest.

The exchange-traded fund (ETF) is a tech-focused index that is comprised of 100 of the largest domestic and international non-financial companies within the Nasdaq Stock Market, based on their market capitalization. The fund is rebalanced quarterly and provides equal allocation to all of the companies within its portfolio with no bias toward their sector or market-cap weighting.

QQEW is a fund that is intended to approximate the performance of the Nasdaq 100 for investors who are interested in a purer form of exposure to the non-financial space with less concentration. Though the fund has less liquidity than some of its peers, it may be appealing to longer-term investors since its equal-weighting methodology mitigates some of the impact from the Nasdaq 100’s tech-heavy composition.

QQEW has a 0.59% expense ratio and a modest 0.32% dividend yield. The fund has $1.26 billion in assets under management and $1.24 billion in net assets. Year to date, this ETF has shown solid performance, with a mid-sized dip in September 2020 and another one two months later in November.

However, since that November dip, the fund has had a solid run. Today, the fund opened at $107.19, which is at the high end of its 52-week range.

Tech stocks compose 37.55% of the fund’s portfolio, with health care, 15.84%, and consumer cyclical, 13.87%, holdings not far behind. The fund’s top five individual holdings include Applied Materials Inc. (AMAT), 1.13%; KLA Corp. (KLAC), 1.11%; ASML Holding NV ADR (ASML), 1.10%; Cadence Design Systems Inc. (CDNS), 1.07% and Costco Wholesale Corp. (COST), 1.07%.

In summation, the First Trust Nasdaq-100 Equal Weighted Index Fund (NASDAQ: QQEW) tracks 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market. Unlike other funds, QQEW has no bias toward market sector or weighting when adding to its portfolio. As it is equally weighted and rebalanced quarterly, it may be a good way to gain broad-based exposure to the Nasdaq 100, as well as a potentially strong long-term investment.

However, I urge interested investors to conduct their own due diligence to decide whether this fund fits a particular individual’s personal portfolio goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.