QQQ, one of the largest U.S. ETFs, has equal-weight equivalents equal-weight equivalents such as the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSEArca: QQQE) and the First Trust NASDAQ-100 Equal Weighted Index Fund (NasdaqGS: QQEW).
The tech sector could even see more free cash on hand if Congress proceeds with plans to cut down capital gains on repatriated earnings or follow in President-elect Donald Trump’s proposed repatriation tax holiday policy that would encourage large multi-national companies to bring back hundreds of billions of dollars in cash to the U.S. for possible use in dividends, deals or other projects. Trump plans to levy a 10% repatriation tax on U.S. companies’ overseas profits from foreign subsidiaries, compared to the current 35% tax rate.
Should those plans come to fruition, it would benefit QQQ, an ETF that allocates about 20% of its weight to Apple Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT).
“While the fund’s technology orientation won’t always pay off, it has worked out well over the past decade, owing to its overweighting in the technology sector and more favorable stock exposure in that sector. However, its sector concentrations tend to make it more volatile than most of its large growth peers,” said Morningstar regarding QQQ.
Tom Lydon’s clients own shares of QQQ and AAPL.