What are the underlying ETFs included in the QQQE ETF?

The QQQE ETF includes all active Select Sector SPDR® ETFs, such as the Communication Services Select Sector SPDR® Fund, Consumer Discretionary Select Sector SPDR® Fund, Consumer Staples Select Sector SPDR® Fund, Materials Select Sector SPDR® Fund, Energy Select Sector SPDR® Fund, Technology Select Sector SPDR® Fund, Utilities Select Sector SPDR® Fund, Financial Select Sector SPDR® Fund, Industrial Select Sector SPDR® Fund, Health Care Select Sector SPDR® Fund, and Real Estate Select Sector SPDR® Fund.

How does the QQQE ETF aim to achieve its investment objective?

The QQQE ETF uses a "fund of funds" approach, investing at least 90% of its total assets in the shares of the Underlying Sector ETFs, which are designed to track their respective underlying sector indices.

How often is the Underlying Index of the QQQE ETF rebalanced?

The Underlying Index is rebalanced quarterly during the months of March, June, September, and December to maintain an equal weighting of the Underlying Sector ETFs.

What are the advantages of investing in the QQQE ETF?

Investing in the QQQE ETF offers exposure to a diversified basket of sector-specific ETFs, simplifies access to multiple sectors, and provides potential for growth in line with the performance of the underlying ETFs.

6 min read

By Beqa Bumbeishvili, ETF Insider

What is the QQQE ETF ?

In the world of finance, Exchange-Traded Funds (ETFs) have gained immense popularity due to their convenience and diversified investment options. Among them, the QQQE ETF stands out as an intriguing choice for investors seeking exposure to the NASDAQ-100 Index®. In this article, we will delve into the QQQE ETF's overview, its underlying assets and exposure, the benefits it offers to investors, and essential considerations before investing.

QQQE ETF: Overview

The QQQE ETF, known as the Direxion NASDAQ-100® Equal Weighted ETF, is designed to track the performance of the NASDAQ-100 Equal Weighted Index. As an exchange-traded fund, it allows investors to buy or sell shares throughout the trading day, offering liquidity and flexibility. The ETF's primary objective is to replicate the performance of the index it follows, providing investors with the opportunity to gain exposure to a diverse basket of companies across various sectors.

QQQE ETF: Underlying and Exposure

The underlying assets of the QQQE ETF are tied to the NASDAQ-100 Equal Weighted Index, which comprises approximately 100 of the largest domestic and international non-financial companies listed on The NASDAQ® Stock Market. The Index is equal-weighted, meaning that each company within it carries an equal weight, regardless of its market capitalization.
Rebalancing of the Index occurs quarterly, and it is reconstituted annually. As of December 30, 2022, the Index consisted of 101 constituents with an average market capitalization of $142.8 billion. The companies listed within the Index were predominantly concentrated in the information technology and consumer discretionary sectors. However, it's essential to note that the composition of the Index may change over time, potentially impacting the ETF's exposure.

QQQE overlap What is the QQQE ETF ?

QQQE ETF: Benefits of Investing

There are several compelling reasons why investors might consider the QQQE ETF as part of their portfolio. Firstly, the ETF's equal-weighted approach ensures that all included companies receive equal representation, mitigating the impact of individual company performance on the overall index returns. This approach can reduce concentration risk, which may be prevalent in market-cap-weighted indexes where a few large companies dominate.
Moreover, investing in the QQQE ETF provides investors with exposure to a wide range of companies across various sectors, including technology, consumer discretionary, and more. This diversification can potentially enhance the overall risk-adjusted returns of an investment portfolio, especially for those looking to benefit from the growth of the technology sector.

QQQE ETF: Considerations Before Investing

While the QQQE ETF offers enticing benefits, it is crucial to consider certain factors before making an investment decision. As with any investment, past performance is not indicative of future results. Investors must conduct thorough research and analysis to understand the potential risks and rewards associated with investing in the ETF.
Additionally, the QQQE ETF's passive or indexing approach means that it aims to replicate the performance of the underlying Index. However, there might be instances where the fund may hold a representative sample of the securities in the Index rather than holding all of them. As a result, the fund's performance may slightly deviate from that of the Index.
Furthermore, investors should be mindful of the concentration risk, given that the ETF may concentrate its investments in certain industries to the same extent as the underlying Index. This could result in higher exposure to specific sectors, which may be subject to increased market volatility.

Conclusion:

The QQQE ETF offers investors a unique opportunity to gain exposure to the NASDAQ-100 Equal Weighted Index, which includes a diversified basket of non-financial companies. Its equal-weighted approach, coupled with broad sector representation, can provide diversification and potential growth prospects for investors. Nevertheless, investors should exercise due diligence and consider their investment objectives and risk tolerance before incorporating the QQQE ETF into their portfolios.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. It does not provide any investment advisory services. Investors should consult with a qualified financial advisor before making any investment decisions.

Sources:
The Fund's Prospectus and Fact Sheet
Index Methodology of the NASDAQ-100 Equal Weighted Index
NASDAQ-100 Index® Information from NASDAQ, Inc.

QQQE ETF issuer
QQQE ETF official page

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FAQ

What is the QQQE ETF?
The QQQE ETF is an exchange-traded fund that seeks to replicate the performance of the Underlying Index, which is an index of ETFs comprised of all active Select Sector SPDR® ETFs in an equal-weighted portfolio.
What are the underlying ETFs included in the QQQE ETF?
The QQQE ETF includes all active Select Sector SPDR® ETFs, such as the Communication Services Select Sector SPDR® Fund, Consumer Discretionary Select Sector SPDR® Fund, Consumer Staples Select Sector SPDR® Fund, Materials Select Sector SPDR® Fund, Energy Select Sector SPDR® Fund, Technology Select Sector SPDR® Fund, Utilities Select Sector SPDR® Fund, Financial Select Sector SPDR® Fund, Industrial Select Sector SPDR® Fund, Health Care Select Sector SPDR® Fund, and Real Estate Select Sector SPDR® Fund.
How does the QQQE ETF aim to achieve its investment objective?
The QQQE ETF uses a "fund of funds" approach, investing at least 90% of its total assets in the shares of the Underlying Sector ETFs, which are designed to track their respective underlying sector indices.
How often is the Underlying Index of the QQQE ETF rebalanced?
The Underlying Index is rebalanced quarterly during the months of March, June, September, and December to maintain an equal weighting of the Underlying Sector ETFs.
What are the advantages of investing in the QQQE ETF?
Investing in the QQQE ETF offers exposure to a diversified basket of sector-specific ETFs, simplifies access to multiple sectors, and provides potential for growth in line with the performance of the underlying ETFs.

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