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This overview on QQQJ will examine its investment objective, identify its core holdings, and discuss how it may fit into your portfolio.
What is QQQJ?
The Invesco NASDAQ Next Gen 100 ETF invests in the 101st to the 200th largest companies on the NASDAQ.
The stocks in QQQJ are “on deck” to be included in the famed Invesco QQQ Trust (QQQ), which invests in the 100 largest companies on the Nasdaq, such as Apple, Microsoft, and Google.
As a result, QQQJ consists mostly of mid to large-cap U.S. stocks in the information technology, health care, and consumer services sectors of the economy.
Understanding QQQJ
QQQJ is perhaps the riskiest fund amongst the non-leveraged Nasdaq ETFs.
It has a bias towards growth stocks that tend to trade at higher valuation metrics – a preference that makes QQQJ more volatile than your average exchange-traded fund.
However, the volatility that comes with growth investing aligns with the investment objective of the fund.
These “Next Gen” companies have lofty aspirations, and you must be willing to assume a certain amount of risk if you want to participate in their potential upside.
Fortunately, Invesco takes steps to reduce these risks by deploying a relatively equal-weighted allocation strategy to the holdings.
About one out of three Next Gen 100 companies eventually make it into the Nasdaq-100, but it’s not particularly obvious which ones will and which ones won’t at any given time.
Therefore, the 103 holdings in QQQJ receive similar allocations. The top holding in the fund has just a 2.47% allocation.
This is much less than the 12% allocation that Apple, the top holding in QQQ, receives.
In sum, the ETF improves its ability to capture performance from its winners by spreading assets across all of its holdings.
QQQJ ETF Details
Below is a high-level overview of QQQJ’s details:
- 1-Year Performance: -14.62%
- Expense Ratio: 0.15%
- Annual Dividend Yield: 0.30%
- AUM: $953 million
- 3 Month Avg. Volume: 415,000
- Number of Holdings: 103
- Inception Date: 2020
Relatively speaking, QQQJ is a low-cost fund – the 0.15% expense ratio isn’t quite Vanguard-low, but it’s still cost-effective.
Additionally, the holdings in QQQJ should be the last companies to pay out a dividend, so the low dividend yieldshould not be a surprise.
And as you can see, QQQJ is still a relatively small and new fund, attracting about $1 billion in assets since its launch in 2020.
Next, we’ll look at where those assets get invested.
QQQJ Top Holdings
Here are the top holdings in QQQJ:
- Trade Desk (TTD) 2.47%
- Expedia (EXPE) 1.93%
- Cerner Corporation (CERN) 1.87%
- ON Semiconductor (ON) 1.80%
- MongoDB (MDB) 1.70%
- CoStar Group (CSGP) 1.63%
- Coca-Cola Europacific Partners (CCEP) 1.61%
- CDW Corp (CDW) 1.59%
- Diamondback Energy (FANG) 1.58%
- Seagate Technology Holdings (STX) 1.57%
Only 17% of the ETF’s total assets are invested in these top ten names for reasons previously identified.
We also expect some turnover amongst these top holdings. QQQJ’s top holdings in six months may be dramatically different than they are today.
Invesco NASDAQ Next Gen 100 ETF: Sector Breakdown
We previously mentioned the top three sectors in QQQJ, but here’s a more comprehensive look:
- Information Technology: 36%
- Health Care: 22%
- Communication Services: 13%
- Consumer Discretionary 13%
- Industrials: 10%
- Consumer Staples: 1%
- Real Estate: 1%
- Utilities: 1%
- Materials: 1%
The substantial amount of technology exposure makes sense, given the nature of the fund.
The 36% of assets in the information technology sector consist of rapidly growing cybersecurity and semiconductor stocks, among others.
Frequently Asked Questions
Is the QQQJ a good investment?
QQQJ is a good investment if you’re seeking exposure to mid-cap growth stocks. Like most growth-oriented funds, QQQJ is down on the year, but that comes with the territory of higher-risk, higher-reward ETFs.
What companies are in QQQJ?
The top companies in QQQJ are Trade Desk (TTD), Expedia (EXPE), Cerner Corporation (CERN), ON Semiconductor (ON), MongoDB (MDB), CoStar Group (CSGP), Coca-Cola Europacific Partners (CCEP), CDW Corp (CDW), Diamondback Energy (FANG), and Seagate Technology Holdings (STX).
What does QQQJ consist of?
QQQJ consists primarily of high-growth technology, health care, and communication services stocks of the mid-cap type. The fund’s price-to-book ratio is 12.22, and the price-to-earnings ratio is 31.36. Both of these metrics are well above their respective industry averages.
What is the difference between QQQ and QQQJ?
QQQ consists of the 100 largest stocks on the NASDAQ, while QQQJ consists of the 101st to 200th largest stocks on the NASDAQ.
Bottom Line: Invesco NASDAQ Next Gen 100 ETF
Consider QQQJ if you’re looking to invest in mid-size NASDAQ companies.
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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched the QQQJ ETF.
