VIDEO: ETF of the Week: QQQM

On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the Invesco Nasdaq 100 ETF (QQQM) with Chuck Jaffe of Money Life. The pair discussed several topics related to the ETF, in order to give investors a deeper understanding of it. One fund, on point for today. The expert to talk about it. This is the ETF of the Week! Welcome to the ETF of the Week, where we examine trending, new, newsworthy, unique, and intriguing exchange-traded funds with Todd Rosenbluth, who’s the head of research at VettaFi. And at VettaFi.com, you’ll find all the tools and research you need to become a savvier, smarter investor in ETFs. Todd Rosenbluth, great to chat with you again! It’s great to be back, Chuck! Your ETF of the Week is… The Invesco Nasdaq 100 ETF. QQQM. QQQM, the Invesco Nasdaq 100 ETF. This is a fund that has been, well, riding the wave. It’s well thought of by everybody. Why is it the ETF of the Week now? A few reasons. So, QQQM just hit $100 billion in assets under management. It also has received new competition from iShares and from State Street that now offer slightly cheaper products. I think a lot of people are focused on the Nasdaq 100 because it added exposure to SpaceX, but actually SpaceX is quite small, and what we’ve seen is other companies outside of the traditional Mag Seven have gained traction. Micron is now a top-five position overall. The Nasdaq 100 is performing great. This is a low-cost, liquid way of getting exposure, despite new competition. At the same time, you know, we’ve been talking a lot about actively managed ETFs. This is the classic “just buy the index.” And it’s a volatile index. Again, this scores well—if you’re looking at Morningstar’s data, five stars; if you’re looking at Lipper data, it gets the highest rating in everything but preservation of capital, where it’s in the middle of the road. And by just about every measure, it’s hard to be disappointed with this fund. How should somebody be using it? And if they don’t have this fund yet, do you want to add what amounts to a core fund to a portfolio that has other stuff in the core? So, a few things here. QQQM, for many people, has been the growth-oriented part of their core. So, you might own exposure to the S&P 500, which is a mixture of growth and value stocks. QQQM, because it excludes financials and because it’s market-cap weighted, it’s very growth-oriented. Heavy exposure to technology. More modest exposure to consumer discretionary and communication services stocks. This is a growth portfolio of large-cap companies. What we’ve found is that people have been continuing to add exposure to it as the market has climbed higher, and even when there was hesitation about the Mag Seven, people put money into QQQM. It’s been quite popular this year, and it’s worked out. You mentioned it’s index-based. This index-based strategy is outperforming most of the active products. In fact, as you noted, five-star rated by Morningstar, which has mostly actively managed products within their universe. It scores very well according to Lipper. Again, for the performance attributes, it’s hard to find a fund that’s actively managed that has outperformed the Nasdaq 100 over the longer term. It’s just hard to do, because the mega-cap stocks continue to climb higher. There are probably not going to be many investors out there who don’t have a pretty significant weighting to technology. How do you add this to a portfolio and not be overweight that much more, because it’s the tech-heavy index, et cetera, and that is something that some people at leas.