Invesco, in partnership with Nasdaq, is looking to expand on its success with the Invesco QQQ Trust (QQQ) by launching four new strategies linked to Nasdaq indexes.
Coined the “Invesco QQQ Innovation Suite,” the lineup consists of various product structures, including one mutual fund, one unit investment trust (UIT) and two ETFs, detailed below:
QQQM is essentially identical to QQQ, but comes with a lower price tag of 0.15%, or $15 per $10,000 invested. (QQQ costs 0.20%). The cheaper price tag on an identical portfolio is aimed at investors with a long-term time horizon, who are looking for a buy-and-hold allocation rather than a highly traded investment.
QQQ is the second most traded ETF in the U.S., behind only the SPDR S&P 500 ETF Trust (SPY), but to some investors, daily liquidity is less important than price.
Invesco’s move is similar to what other big issuers have done in the past, bringing to market me-too versions of their own funds for a cheaper price in an effort to broaden the audience for their strategies. Think of iShares and its Core lineup—for example, “EEM” versus “IEMG”—or State Street’s new version of “GLD,” the cheaper “GLDM.”
QQQJ is designed to capture what’s next for the Nasdaq-100. The fund tracks the Nasdaq Next Generation 100 Index, which consists of the "next 100" nonfinancial Nasdaq-listed companies. By design, QQQJ tilts more midcap than QQQ and QQQM.
This ETF offers investors another universe of growth names that have been known to feed stocks to the Nasdaq-100 over time.
Also in the lineup are the Invesco Nasdaq-100 Growth Leaders Portfolio (QQQG), a UIT; and the mutual fund Invesco Nasdaq 100 Index Fund (IVNQX), offering investors who prefer this wrapper access to the Nasdaq-100 Index.
The launches come on the heels of QQQ crossing the $100 billion in assets milestone in May; the ETF continues to grow as investors show immense appetite for its focus on large cap growth—and its tech tilt—in the year of a global pandemic.
Now a $137 billion ETF, QQQ has been a top asset gainer in 2020, raking in some $17 billion in net new assets. It has also been one of the most traded funds so far this year.
Strong performance has also played a role in the fund’s asset-gathering success. Year to date, QQQ is up about five times more than the S&P 500, and significantly more than the Dow Jones Industrial Average. The fund has also outperformed these benchmarks most years in the past decade.
To quote CFRA’s Todd Rosenbluth, “QQQ is likely to remain among the 10 largest ETFs in the near-term given its liquidity and the strong affinity growth investors have gained over the past decade. However, we expect some investors to find the lower-cost QQQM alternative and more moderately sized companies inside QQQJ to be appealing.”
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