Largest Tech ETF is Seeing Daily Billion-Dollar Flows

Advisors know that when it comes to getting large cap tech exposure via an ETF, one of the funds that quickly come to mind is the Invesco QQQ ETF (NASDAQ: QQQ). In terms of sheer size, QQQ reigns supreme and as such, it’s been seeing heavy, billion-dollar inflows as of late, according to a recent Bloomberg article.

QQQ seeks investment results that generally correspond to the price and yield performance of the NASDAQ-100 Index®. The composition and weighting of the securities portion of a portfolio deposit are also adjusted to conform to changes in the index.

Per the article, QQQ “has seen an average of $1.5 billion per day in flows over the past month, according to data compiled by Bloomberg. The fund posted its biggest withdrawal in two decades in late September, followed by its largest influx in the same time period one day later. The ETF lured $3 billion the following week, ahead of a $3 billion exit the next day. This week brought another $3.7 billion inflow in a single day.”

One thing that’s confounding market experts is the origin of these large inflows.

“While QQQ is one of the most heavily traded ETFs on the market, the consistency and sheer magnitude of the mega-flows has analysts at odds over what’s driving them, given that they don’t appear to line up with any rebalancing schedule or model portfolio shifts,” the article mentioned “The recent uptick in options activity has spurred speculation that the ETF is being used as a hedging vehicle, while some say that renewed appetite among retail investors is fueling the flows. Others posit that the cash churn amounts to a massive tug-of-war over the outlook for technology shares, which have already rallied an astonishing 73% from March lows.”

Can’t Get Enough of QQQ?

Investors piling in on QQQ can also take advantage of a midcap option. Large cap tech has been having its day in the sun despite the Covid-19 pandemic, but they can’t have all the fun–enter the Nasdaq Next Gen 100 ETF (QQQJ).

QQQJ also 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 midcap companies that investors may not know about due to a lack of media exposure.

Per a CNBC article, QQQJ “might more appropriately be called the Nasdaq 100 Junior Varsity list. The Invesco QQQ Trust (QQQ) started tracking the Nasdaq 100 Index in 1999. Since then, it’s become the fifth-largest ETF listed in the U.S., with $135 billion in assets under management.”

“Now, Invesco is looking to capitalize on the interest in technology and growth stocks by offering a new “junior” QQQ,” the article added. “Any why not? QQQ is up nearly 40% this year. Shares outstanding are up nearly 20% since March, a sign of the exploding interest in the growth stocks the fund is famous for.”

Of course, investors can always stick with the tried and true QQQ. Not only is it a favorite for traders due to its high trading volume and liquidity, long-term buy and hold investors also opt for the ETF due to its exposure to the white hot large cap tech sector. This could also, ultimately, bode well in other fund areas, such as the Xtrackers MSCI EAFE Hedged Equity ETF (DBEF).

For more market trends, visit ETF Trends.