Offsetting Size Bias in Growth Stocks with QQQJ

Investors looking for easy exposure to a slew of Nasdaq stocks, but worried about size bias in their tech holdings, should look no further than the Invesco NASDAQ Next Gen 100 ETF (QQQJ).

While Invesco’s flagship product, the Invesco QQQ Trust (QQQ), provides access to the 100 largest non-financial companies listed on the Nasdaq. QQQJ offers this approach with a twist: exposure to the 100 largest Nasdaq-listed companies, excluding financials.

With a focus on mid-caps, QQQJ companies are defined by their high spending on research and development as a proportion of their revenue, which could set them up for high future growth. Research and development expenditure is considered a key measure of a company’s commitment to innovation. Research and development can lead to discoveries, competitive advantages and cost-cutting measures, according to Invesco.

Due to their high growth profiles and innovative business models, some companies may eventually “graduate” from a stake in QQQJ to a stake in QQQ.

Securities included in QQQJ are not limited to tech stocks. QQQJ tracks an index of the largest Nasdaq-listed non-financial stocks that are not included in the Nasdaq-100 Index. Consumer services, transportation, consumer durables and retail are sectors included in the fund and weighted at more than 4.5%, according to the ETF database.

The fund’s top 10 holdings include ON Semiconductor Corporation (ON), Diamondback Energy (FANG), CoStar Group (CSGP), Coca-Cola Europacific Partners (CCEP), CDW Corp (CDW), Tractor Supply Company (TSCO), Ulta Beauty (ULTA), Horizon Therapeutics Public Limited Company (HZNP), Enphase Energy (ENPH) and Expedia Group (EXPE), according to the ETF database.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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