Impressive earnings reports have recently helped lift the technology sector and ETFs such as XLK. Historically, after a profit falloff, the technology sector has been among the best areas in a rebound. Another catalyst is the tech sector’s status as a cyclical sector. Cyclical groups historically perform well as interest rates rise.
A disadvantage of equal-weight indexes and ETFs is that when large- and mega-cap names, such as Amazon, Apple, Microsoft, Facebook and Google parent Alphabet, perform well as they are doing this year, the equal-weight strategy can lag cap-weighted equivalents. For example, QQEW is trailing QQQ by 70 basis points this year.
None of QQEW’s holdings account for more than 1.2% of the ETF’s weight and the fund’s combined exposure to Amazon, Apple and Facebook is barely more than 3%.
Home to nearly $473 million in assets under management, QQEW holds 107 stocks and tracks the NASDAQ-100 Equal Weighted Index. The ETF turns 11 years old later this month.
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