Many investors use exchange-traded funds to invest in popular benchmarks, and the PowerShares QQQ (QQQ -0.57%) gives its shareholders quick access to the 100 stocks in the Nasdaq 100 index. Investors appreciate the PowerShares QQQ ETF because the Nasdaq 100 is heavily weighted toward tech stocks, which often have higher growth characteristics than other stocks. With a reasonable 0.20% expense ratio and holdings that include some of the highest-profile companies in the world, PowerShares QQQ makes a good ETF holding for many investors.
Top 10 PowerShares QQQ Holdings
|
Stock |
% of Assets |
|---|---|
|
Apple |
12.04% |
|
Microsoft |
8.26% |
|
Amazon.com |
7.12% |
|
|
5.32% |
|
Alphabet Class C |
5.03% |
|
Alphabet Class A |
4.39% |
|
Comcast |
2.93% |
|
Intel (INTC -1.79%) |
2.53% |
|
Cisco Systems (CSCO 0.67%) |
2.34% |
|
Amgen |
1.76% |
Source: PowerShares.
A clear tech bias
It's pretty easy to see from these top 10 holdings that the PowerShares QQQ has a bias toward technology stocks. After all, eight of the 10 stocks above are clearly in the tech realm, and overall, almost 60% of PowerShares' assets are invested in information technology.
Moreover, technology has been a big driver in the PowerShares QQQ's recent run to all-time record levels. The top seven holdings listed above have all posted double-digit percentage gains so far this year, and Apple, Amazon, and Facebook are all up by more than 33% just since the beginning of 2017. It's largely because of the success of these tech powerhouses that the ETF managed last year to eclipse its highs from the tech boom in 1999 and early 2000 and push to unprecedented levels.
Image source: Invesco PowerShares.
Going beyond technology
However, it's important not to underestimate the impact that other sectors of the market have on the PowerShares QQQ's results. Consumer stocks make up almost 30% of the portfolio, with a heavy emphasis on discretionary names. Healthcare has a roughly 10% weighting in the ETF, with only very small percentages to the industrials and telecommunications services sectors.
Still, even many of the stocks that fall into other categories have ties to technology. Priceline Group (BKNG -0.40%) is only a few positions below the top 10, and the travel portal gets classified as a consumer stock despite relying on online and mobile technology to drive its business. Similarly, Starbucks (SBUX 1.09%) has pioneered the coffeehouse business, and it has worked hard to build a unique experience for its customers. Yet one of the initial draws of Starbucks during the tech boom was the availability of Wi-Fi internet access, and the importance of mobile ordering has risen dramatically in the company's efforts to give its customers everything they want.
Looking for growth
Regardless of what sector they're in, most holdings of the PowerShares QQQ share a focus on growth. Among the holdings, more than 60% are characterized as growth stocks compared to just 13% as value -- and the rest straddle the fence in the blend category.
Moreover, even among those stocks that get put into the value category, the PowerShares QQQ's holdings tend to have significant growth ambitions. For example, Intel and Cisco both appear in the value category, primarily because their valuations aren't as high as those of its peers on the holdings list. Yet Intel is focusing on trying to push its data center group sales sharply higher, while Cisco's smart-cities initiative is a linchpin of its overall growth strategy going forward.
The Nasdaq has distinguished itself as a hotbed of growth prospects in the stock market, and the PowerShares QQQ does a good job of giving investors access to those high-profile drivers of the global economy. For those looking to invest in Nasdaq stocks in a diversified way at low cost, PowerShares QQQ is one of the most popular and easy-to-trade investment options you can choose today.
