This September, Victory Capital launched the VictoryShares Nasdaq Next 50 ETF (QQQN), which has led to a lot of interest. ETF Trends spoke with Scott Kefer, Senior Portfolio Manager for Victory Capital, about the fund’s current status and why it has found success so quickly.
“The launch of QQQN has been one of our best as a firm since we’ve been in the ETF business,” says Kefer.
QQQN offers exposure to the new generation of innovators: 50 stocks that are next in line for inclusion in the Nasdaq-100 Index. The fund seeks to provide investment results that track the performance of the Nasdaq Q-50 Index.
The Benefits of Rebalance Quarterly
Kefer highlighted that QQQN rebalances quarterly. As a result, he noted this cadence of rebalancing allows the fund to react quicker to the dynamic nature of these stocks.
With the huge rise some mid-cap companies go through, quarterly rebalancing allows for some major pickups throughout the year. As a side bonus, the companies that are underperforming can be removed from the fund in a more timely manner.
“We think the quarterly reconstitution is a meaningful portion the performance we already see in our index’s live history,” Kefer adds.
As a whole, Kefer and Victory feels very good about the launch, saying the strategy stands on its own as it focuses on a very exciting space for investors.
He said that’s ultimately what has allowed for so much traction out of the gate, noting that in a slow-growth environment where people are hanging on the idea of whether or not stimulus will arrive any time soon to help both the U.S. and the global economy going forward, there’s a market dynamic to consider. Additionally, the fact that the underlying index has a live track record going back to 2007 has resonated with clients, meaning no need to rely on a backtest.
Kefer said these innovative companies are growing organically, less need for the economy to provide further support necessarily.
“They are not cyclical by nature,” he said. “These companies are innovative, disruptive, and growing. They are often taking market share from the stauncher, perhaps more mature companies in their space. That’s proven to be an attractive area for investors right now, showing why something like QQQN is garnering interest.”
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