In a battle of two Invesco tech ETFs, the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ Next Gen 100 ETF (QQQJ), it’s the former winning thus far.
Big tech names like Apple, Microsoft, and Amazon have smashed earnings reports recently, giving large caps the upper hand with QQQ. QQQJ tends to focus on mid caps and is also trending higher this year, but may be more of a long-term hold play.
“QQQ has outperformed QQQJ over the past month, three months, six months, year to date and in the last 12 months,” a CNBC article reported. “In a Monday interview with CNBC’s ‘Trading Nation,’ Chad Morganlander, senior portfolio manager and co-founder at Washington Crossing Advisors, took his pick out of the two funds.”
“These two ETFs are vastly different,” Morganlander said. “We’re staying with the trade of large-cap tech.”
QQQ seeks investment results that generally correspond to the price and yield performance of the NASDAQ-100 Index®. To maintain the correspondence between the composition and weights of the securities in the trust and the stocks in the NASDAQ-100 Index®, the adviser adjusts the securities from time to time to conform to periodic changes in the identity and/or relative weights of index securities.
The composition and weighting of the securities portion of a portfolio deposit are also adjusted to conform to changes in the index. QQQ is praised for its liquidity, as well as its all-encompassing exposure to big names in big tech.
As mentioned, QQQJ gives ETF investors tech exposure, but with a mid cap twist. While large cap companies in tech like Apple or Microsoft are solid plays, there are also opportunities to be had in mid cap companies that investors may not yet know of.
Who Wins in the Second Half?
While QQQ has the upper hand midway through 2021, will its lead be sustainable? Morganlander seems to think so, given the focus on quality names.
“The large-cap one has 60% in technology, the smaller ‘J’ version has 40% and has much more exposure to industrials as well as health care,” Morganlander said further.
“Overall, the larger cap ones have higher-quality names that are much more consistent with resilient balance sheets,” he said. “So, that’s where we would stay going into the second half of this year.”
Either way, investors have seen strong gains in both ETFs.
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