The trader’s ETF of choice, the Invesco QQQ Trust (QQQ), is praised for its liquidity as well as its all-encompassing exposure to big names in big tech. On the other end of the spectrum, there’s the buy-and-hold Invesco NASDAQ Next Gen 100 ETF (QQQJ) for next generation exposure.
QQQJ gives investors exposure to the stocks of tomorrow today.
“With large-cap stock valuations looking stretched, it might be time to consider looking for other growth opportunities in this market,” a The Street article said. “For investors who want to take this path, there’s a new ETF that targets the Nasdaq stocks that may be next in line to join the Nasdaq 100 index at some point in the future.”
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.
For investors concerned about a size bias in their tech holdings, the junior fund can also help offset the large cap tilt of QQQ and the Q mini.
Since its inception date, October 13 of last year, QQQJ has been outperforming QQQ. The fund has returned roughly 15% more than QQQ.
QQQJ: A Focus on Growth Names
Unlike big brother QQQ, investors won’t see the likes of Microsoft, Amazon, and Apple in QQQJ’s top holdings. Instead, investors will see growth names like Etsy, Roku, CrowdStrike Holdings, The Trade Desk Inc, and ViacomCBS.
In the past year, Etsy is up over 360% while Roku has posted 276%. Getting exposure to these companies gives QQQJ the tilt towards growth-oriented companies with future revenue-generating potential.
“With the markets focused heavily on mega-cap tech names over the past couple years, it makes sense to rotate into smaller companies, which are comparatively cheaper and have the potential to deliver higher growth in the next few years,” the article said. “Historically, the Next Gen 100 index has proven to deliver greater revenue growth and (somewhat surprisingly) higher dividend growth as well.”
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