The Invesco QQQ Trust ETF (QQQ) might have the recognition in the ETF space, but don't look just yet because its junior counterpart could be poised for more gains. The Nasdaq Next Gen 100 ETF (QQQJ) could give investors the necessary exposure to the next big thing in the mid-cap universe.
Like big brother QQQ, QQQJ 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 mid-cap companies that investors may not know about due to a lack of media exposure.
According to Invesco, the index “is comprised of securities of the next generation of Nasdaq-listed non-financial companies; that is, the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index®. The Fund and Index are rebalanced quarterly and reconstituted annually.”
“QQQJ will give investors access to 100 mid-cap companies using technology to disrupt their sector,” said John Hoffman, Invesco’s head of Americas ETFs. “While this does include companies in the technology sector, the commonality across these companies is their legacy of using innovation and technology to create competitive advantages across multiple sectors and industries.”
With challenges up ahead for the heavy hitters in tech, QQQJ can capitalize on mid-cap market trends that can power through the pandemic. With more government scrutiny aimed at more tech heavyweights, QQQJ avoids the negative exposure.
“We’re in a pandemic-driven or pandemic ... solutions-driven economy where the companies that are making people’s lives easier are the companies that people are investing [in],” McOrmond said. “The QQQ ... will always get assets and certainly is a place for dollars in the FAANG [stocks], but they’re coming under some fire, right? So, I think this serves a different investor base and the next leg of growth.”
Furthermore, QQQJ gives investors additional diversification to capture any upside in mid-cap trends they might miss by strictly staying in large caps.
“The key is diversification,” said CEO of ETF Trends and ETF Database Tom Lydon in the same “ETF Edge” interview. “Going forward, especially as we’re seeing rumblings of antitrust discussions, are we going to be as confident in those FAANG stocks going forward? Or here’s an opportunity to maybe invest in the future FAANG stocks while you can diversify away and maybe catch lightning in a bottle one more time in the form of this next ETF.”
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.