Tracking the Nasdaq 100 With An Equal Weighted Index Fund

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

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

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