Nasdaq ETF at Highest Since 2000 on Apple, QE3
September 13th, 2012 at 4:23pm by Tom Lydon
The highly traded PowerShares QQQ (NasdaqGM: QQQ) rose to a fresh 52-week high on Thursday after the Federal Reserve announced more quantitative easing, or QE3. The Nasdaq-100 ETF is trading it its highest levels since 2000 and the dot-com crash.
Top holding Apple (NasdaqGS: AAPL) rallied to a lifetime high Thursday as investors cheered the Fed’s expanded bond-buying program. “Apple was also helped by a chorus of praise from analysts for its iPhone 5, which the company unveiled at a media event in San Francisco on Wednesday,” MarketWatch reports.
Apple is the largest stock in QQQ at 19.7% of the ETF’s portfolio.
QQQ has been outperforming the broad market in 2012.
Most of the outperformance of tech-focused ETFs has been driven by Apple and the success of the iPad and recent iPhone launches. [Nasdaq ETFs Key on Apple, iPhone 5]
“In fiscal 2011, the iPhone accounted for 40% of Apple’s total revenue, making the smartphone the company’s most important revenue driver. The iPhone is also Apple’s most important way of bolstering its presence in foreign markets and adding exposure to new international frontiers,” Benzinga reports. [Apple, Samsung Battle Felt in ETFs]
QQQ is dominated by the technology and consumer discretionary sectors. Apple makes up about 20% of holdings, causing this ETF to be influenced strongly by the company. David Zanoni for Seeking Alpha reports that the company’s stock rose from about $400 to $680, for a gain of 70%. [Some of S&P's Favorite Equity ETFs]
QQQ is an inexpensive route for investors to own a piece of Apple. The benefits of exposure to some of the best technology companies is in this ETF, and diversification benefits are also built in due to the exposure to consumer discretionary companies.
QQQ is up about 21.8% year-to-date and has about $35.6 billion in assets under management. The fund is very liquid and the 0.20% expense ratio supports the fact that this ETF is one of the most efficient ways to gain exposure to the upward momentum of Apple.
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own AAPL and QQQ.
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