5 things to know about Invesco QQQ ETF

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Updated: February 04, 2021 11:46 AM

The Invesco QQQ is an exchange-traded fund that gives you access to Nasdaq 100 companies in a single investment.

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For those investing in US stocks from India, the Nasdaq 100 has been a favourite stop. Some of the top-performing US stocks of 2020 such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOGL) collectively known as FAANG stocks are a part of the Nasdaq 100 index. As an Indian investor, you too can participate in the money-making opportunity available in the global companies listed in US stock exchanges. The route to owning US shares from India is simple and almost similar to how you buy Indian stocks in Nifty 50 or Sensex. You need to open US brokerage account and start trading in Nasdaq stocks or other stocks listed in the US stock market.

1. Buying Nasdaq Stocks

There are two ways to participate in the growth story of stocks listed on Nasdaq. You can either buy them individually or buy an exchange-traded fund (ETF) that tracks the index. The Invesco QQQ Trust (QQQ ) is one such ETF that gives you access to Nasdaq’s 100 companies in a single investment. By investing in Invesco QQQ ETF, you are investing in some of today’s most innovative companies, all in one place.

2. How ETF works

ETF is a sort of variant of a mutual fund and tracks a specific index. The units in an ETF can be bought or sold only on a stock exchange anytime during the trading hours. ETF’s are low-cost investments and allow one to take exposure in several stocks of the same index at one time. They come in various forms and typically track different indexes and sectors. Similar to stocks, they even have their specific Ticker symbol. The fund ticker of Invesco QQQ ETF is QQQ.

3. What is Invesco QQQ ETF

Invesco QQQ is an exchange-traded fund that tracks the Nasdaq 100 Index. The Fund will, under most circumstances, consist of all of the stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market-based on market capitalization. The Fund and the Index are rebalanced quarterly and reconstituted annually

4. Invesco QQQ ETF Top Holdings

QQQ’s five largest holdings are Apple Inc (NASDAQ: AAPL) (12.16% of allocation), Microsoft Corporation (NASDAQ: MSFT) (9.5%), Amazon.com, Inc. (NASDAQ: AMZN) (8.72%), Facebook, Inc. Common Stock (NASDAQ: FB) (3.37%) and Tesla Inc (NASDAQ: TSLA) (5.04%).

5. Performance

Over the last 1-year, Invesco QQQ Trust (QQQ ) has generated nearly 48 per cent. As on December 31, 2020, the 12-month return was 48.63 per cent as against 48.88 per cent generated by Nasdaq 100. Going forward, the performance hinges primarily on the top 5 stocks in the index.

The ETF is rated among the top 1 per cent (2 of 325), best-performing large-cap growth funds based on total return over the past 15 years by Lipper, as of September 30, 2020. It has been the 2nd most traded ETF in the US, based on the average daily volume traded, as of September 30, 2020.

Invesco QQQ is a low-cost way of owning the bucket of stocks in the Nasdaq index through the ETF route. An investor should consider investment objectives, risks, charges and expenses carefully before investing. You can even start investing with a small amount and provide global diversification to your Indian portfolio comprising of domestic companies.

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