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QQQ Qualifies For New Highs, But Some Investors Miss Out

by
November 4, 2015 1:46 pm
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On Tuesday, approximately 30 exchange traded funds hit all-time highs. Many of those were ETFs that have come to market this year, but there were seasoned veterans among the group as well with one of the notables being the PowerShares QQQ (NASDAQ: QQQ), the NASDAQ-100 tracking ETF.

 

That's right. Partying like it's 1999, QQQ, one of the world's largest ETFs, is up a tidy nine percent over the past month. Year-to-date, QQQ is higher by 11.4 percent, or more than quadruple the returns offered by the S&P 500. Unfortunately, some investors are missing out on the resurgence of the Nasdaq, at least when it comes to QQQ.

 

Proving that ETF flows data can sometimes be contrarian indicators, in a year which ETF inflows look poised to eclipse prior records and at a time when QQQ is soaring, the ETF has bled assets. To be precise, investors have yanked $1.38 billion from QQQ this year. That is more than has been pulled from any other PowerShares ETF and that is saying something because Illinois-based PowerShares is the fourth-largest U.S. ETF sponsor and has one of the deepest lineups in terms of number of funds. 

 

Perhaps it can be argued that it is understandable that investors have pulled money from QQQ this year. There have been periods of lethargy in 2015 for shares of Apple Inc. (NASDAQ: AAPL), QQQ's largest holding at a weight of nearly 13 percent. There was the biotech swoon, which hurt QQQ because the ETF allocates 14.6 percent of its weight to health care stocks and nearly all of those names hail from the biotech space.

 

On the other hand, Apple is far from the only tech stock found in QQQ and the ETF's second-largest sector weight is 20.1 percent to consumer discretionary, this year's top-performing sector. That means investors that have departed QQQ have missed out on some of the boffo performances turned in by the likes of Amazon.com Inc. (NASDAQ: AMZN), Priceline Group Inc. (NASDAQ: PCLN) and Netflix Inc. (NASDAQ: NFLX).

 

QQQ is not the only NASDAQ-100 tracking ETF that has lost money this year. The First Trust NASDAQ-100 Equal Weighted Index Fund (NASDAQ: QQEW) is lighter by nearly $5.8 million. QQEW is up 6.3 percent over the past month and now resides less than three percent below its all-time high.

 

Interestingly, the Direxion NASDAQ-100 Equal-Weight ETF (NYSE: QQQE), a rival to QQEW, has seen year-to-date inflows of nearly $36 million. QQQE, which is up 6.4 percent over the past month, closed 2.7 percent below its all-time high Tuesday.


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