Invesco has announced that the Invesco QQQ, the firm’s giant Nasdaq 100 Index ETF, has surpassed $100 billion in assets under management.
The Nasdaq 100 has rallied strongly since bottoming out on 20 March (file image)
The Nasdaq-listed fund passed the threshold on Thursday 7 May and, as of market close on 11 May, is reporting total assets of $104bn.
QQQ is the fifth-largest ETF in the US, yet the second most traded ETF, highlighting its popularity as a tactical tool for gaining quick and efficient access to US large-cap, tech-leaning growth exposure.
The $100bn milestone was reached due to a combination of healthy net inflows and strong market performance with the underlying Nasdaq 100 Index quickly rebounding from the Covid-19 sell-off.
QQQ, which comes with an expense ratio of 0.20%, almost closed at $100bn earlier in the year, recording total AUM of $98.8bn at the close of market on 19 February, two days before the start of the global equities rout.
The fund subsequently suffered a -27.9% performance loss until it bottomed out on 20 March, while AUM in the ETF fell as low as $79.7bn on 16 March.
Equity markets have bounced back, however, buoyed by positive sentiment for a global economic recovery in the second half of the year.
QQQ has outperformed the broader market rally, benefitting from a tilt towards technology giants whose cash-strong balance sheets are better able to withstand the virus’s economic damage, while the mass migration of work, school, and entertainment practices online has provided a boost to these businesses’ earnings.
The Nasdaq 100’s largest constituents – Microsoft (11.8%), Apple (11.4%), Amazon (10.0%), and Alphabet (8.0%) – have all shaken off the market drubbing. Apple and Alphabet are slightly up for the year, while Microsoft and Amazon have chalked up gains of 16.9% and 26.9% respectively. Both firms have enjoyed a boost from cloud service income, while Amazon has also capitalized on the shift to online shopping.
The strength of its mega-cap constituents has helped lift the Nasdaq 100 to a 6.8% gain YTD, while the SPDR S&P 500 ETF (SPY US) and SPDR Dow Jones Industrial Average ETF (DIA US) are lagging with losses of -8.6% and -14.4% respectively.
Although the Nasdaq 100 is known for being tech-heavy, it also includes companies operating within the communication services, industrial, retail, telecommunication, biotechnology, health care, transportation, and media sectors.
According to Invesco, beyond the shift to digital working and learning, the index has also benefitted due to its exposure to companies offering potential advancements in biotech and healthcare.
Lorraine Wang, Global Head of ETF Products and Research at Invesco, commented, “There is potential for innovative technology-enabled solutions and medical advancements to drive much of the positive response to the current crisis. Invesco QQQ delivers exposure to the types of innovative companies that are well-positioned to capitalize on a number of transformative, long-term themes in the marketplace.”
The Nasdaq 100’s resilience to the pandemic’s economic impact has led investors to favour the index for their US large-cap exposure. QQQ has enjoyed bumper net inflows recently, adding $5.4bn and 3.2bn in March and April, respectively, while net inflows of $1.1bn month-to-date in May indicate that demand is still robust.
For investors based in Europe, Invesco offers the Invesco EQQQ Nasdaq-100 UCITS ETF, listed on the LSE in USD (EQQU LN) and GBP (EQQQ LN), on Euronext Paris (EQQQ FP), Borsa Italiana (EQQQ IM) and Xetra (EQQQ GR) in EUR, and on SIX Swiss Exchange (EQQQ SW) in USD.
This European fund, which is domiciled in Ireland, has $4.1bn in AUM across all share classes and comes with a TER of 0.30%.