Finding the next big thing among individual stocks is difficult. Trying to that multiple times is even harder, but a new ETF makes that endeavor significantly easier.
That’s one reason why at less than two weeks old, the VictoryShares Nasdaq Next 50 ETF (QQQN) is already among this year’s most impressive rookie ETFs.
The investment seeks to provide investment results that track the performance of the Nasdaq Q-50 Index before fees and expenses. The fund aims to achieve its investment objective by investing at least 80% of its assets in securities in the index. The index comprises the 50 largest non-financial domestic and international companies listed on The Nasdaq Stock Market based on market capitalization after excluding the companies included in the Nasdaq-100 Index.
Translation: QQQN is essentially a proving ground for companies angling for promotion to the widely followed Nasdaq-100.
QQQN’s underlying benchmark “is comprised of 50 securities ranked by market capitalization and reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology,” according to Nasdaq Indexes. “It does not contain securities of financial companies including banking and investment companies, as these are ineligible for Nasdaq-100 Index inclusion.”
QQQN deploys the proven methodology behind the time-tested Nasdaq-100 Index, emphasizing innovation, and growth. Additionally, QQQN hopes to provide access to an index of disruptive and innovative companies, helping to capture their potential early, well before they may grow to be tomorrow’s mega-cap leaders.
“Past performance is never a guarantee of future returns, but that old saying doesn’t diminish the case for QQQN for multiple reasons,” according to Nasdaq. “First, identifying the next wave of innovators via individual stock picking is difficult. QQQN solves for that. Second, when stocks transition from a smaller index to a more widely followed benchmark, as plenty of QQQN holdings will over time, they usually rally.”
QQQN keeps with the spirit of innovative growth stocks by allocating two-thirds of its weight to the technology and healthcare sectors. Plus, the new ETF is backed by a favorable long-term track record.
“From April 30, 2009, to April 30, 2020, the Nasdaq Q-50 outperformed the S&P 500 by 232.64% on a price return basis, in addition to its mid-cap cousin, the S&P MidCap 400 Index, by 272.93%,” according to Nasdaq Indexes research.
For more on innovative portfolio ideas, visit our Nasdaq Portfolio Solutions Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.