Nasdaq announced index changes last week that will be reflected in the Invesco QQQ Innovation Suite. This will be the first time investors will be able to easily capture not only the movement of companies between the Nasdaq 100 and the Nasdaq Next Gen 100 Index, but the addition of 41 new innovators to the Nasdaq Next Gen 100 Index.
“The Nasdaq Next Generation index will welcome 41 new members before market open on Monday, December 21, including six companies (seven securities) from the Nasdaq 100 Index, with a fair amount of the new entrants coming from the biotech and clean energy sectors,” says Ryan McCormack, Factor, and Core Equity Strategist at Invesco.
The newly launched Invesco Next Gen 100 ETF (QQQJ) is the first ETF to track the Nasdaq Next Gen 100 Index, offering investors midcap exposure that complements the Nasdaq 100 tracking the Invesco QQQ ETF (QQQ) and the Invesco Nasdaq 100 ETF (QQQM).
McCormack continues, “We would like to congratulate and welcome the six newest additions to the world’s pre-eminent large-cap growth Index, the Nasdaq 100, and therefore to the Invesco QQQ ETF and Invesco Nasdaq 100 ETF (QQQM).”
“If you look back at the movement of companies between the Nasdaq 100 and the Nasdaq Next Generation Index from 2009 to the present, 17 of the companies that moved into the Next Generation Index were eventually added back into the Nasdaq 100 Index.”
Many of the new entrants to QQQJ are in sectors that are particularly resonant with the current market, including bio-tech Atrazeneca and clean-energy First Solar. Since 2011, 54 constituents of the Nasdaq Next Gen 100 Index have “graduated” to the Nasdaq 100, including companies like Tesla (2013), Netflix (2010), and Moderna (2020).
“The average 12-month return of companies following the move down was 18.8%, with a median return of 9.6%,” McCormack notes.
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