is adding more Qs to its fund lineup, a wager by the world’s fourth-biggest issuer of exchange-traded products that investors’ love affair with technology stocks will continue.
The Atlanta-based asset manager will launch four new investment products tied to its flagship ETF, the
Invesco QQQ Trust
fund. At $134 billion, the Qs, as it is known across Wall Street, has grown to become one of the biggest exchange-traded products in the world and accounts for roughly 42% of Invesco’s ETF assets.
QQQ offers investors exposure to the 100 biggest nonfinancial companies listed on Nasdaq Composite Index and has proved to be a huge draw since the throes of the 2008-09 financial crisis. The four new products look to build on that popularity and help Invesco compete in an industry dominated by
This column assumes that ETFs are the primary investment tool for the reader.
Please see my weekly market summation for a review of the macro-economic environment and general macro-level market trends.
Investment thesis: the macro-averages are now in a bullish posture; it’s a good time to take a new position. But be careful; defensive sectors are starting to rise, indicating traders are a bit more cautious.
Let’s start by looking at last week’s market activity, beginning with the treasury market:
The treasury market moved lower on Monday and then traded sideways for the rest of the week. Volatility was higher on late Tuesday and Wednesday as the market digested the whipsaw activity regarding additional fiscal measures. Also note the sharp sell-off and subsequent rally on Friday, likely due to additional fiscal talk.
SPY trended higher for the entire week as shown by the central tendency line
WBI celebrates 6 years since record-breaking ETF launch
WBI will ring The Closing Bell® at the New York Stock Exchange (NYSE) on Thursday, October 8, 2020. The virtual ceremony commemorates the firm’s initial launch into the ETF space in 2014.
“We are excited to be part of The Closing Bell® virtual ceremony. Six years ago, WBI had the largest single day ETF launch in history. We are excited to be a small piece of the New York Stock Exchange’s innovative history. This year is an exciting year for active ETFs, our suite of active (transparent) and risk-managed ETFs have helped investors navigate 2020’s volatile markets,” said Don Schreiber, Jr., Founder and Co-CEO of WBI.
In 2014, WBI launched a suite of active transparent ETFs with the firm’s time-tested dynamic trailing stops that seek to reduce loss of capital. The strategies have no mandate to be fully invested and
It was another solid quarter for the FactSet Innovative Technology SPDR ETF (NYSEARCA:XITK), even though both it and the Nasdaq fell quite a bit from the quarterly highs. Still, the XITK ETF tacked on a 16.1% gain in the third quarter versus a gain of “just” 11% for the index.
Given that the exchange-traded fund surged more than 47% in the second quarter, last quarter’s gains were impressive. Again that handedly outperformed the Nasdaq, which rallied 30.6% in Q2.
Some investors look at the XITK ETF and say, “No, that’s way too risky. I’ll stick
Investing in gaming and esports is undoubtedly teeming with potential, but investors should consider diverse approaches to these high growth arenas. The VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) belongs on that list.
ESPO seeks to track the performance of the MVIS Global Video Gaming and eSports Index (MVESPO). The index is a rules-based, modified capitalization-weighted, float-adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports.
Traditionally, the gaming investment thesis has revolved around hardware (consoles) and software, or game franchises and titles, but the industry is rapidly evolving and many of the most popular titles and the games played at esports tournaments are PC games, underscoring opportunities with investments tied to the hardware side of computer gaming.
“n 2015, the global gaming PC market hit $24.6bn in revenue, revealed the Jon Peddie Research data. High-end PC
The Vanguard Information Technology ETF (VGT) closely tracks the much more famous Invesco QQQ ETF (QQQ) with the latter having 200,000 followers on Seeking Alpha.
Figure 1: Performance of VGT and QQQ
Now, both VGT and QQQ are dominated by big companies in the technology sector such as Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) which form both ETFs’ largest two holdings respectively.
On the other hand, these two ETFs differ widely as to the other constituents with QQQ being significantly exposed to GAF meaning Google (NASDAQ: GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB).
Figure 2: Holdings of the QQQ and VGT
Behind these differences in terms of underlying stocks, VGT has some key strengths when considering risks, profitability and potential growth which means a better score in the Risk-Reward indicator.
First, VGT’s exposure to Microsoft at 17% compared to
What Happened: Seasoned gamers and investors know that PC games are big business and the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE: NERD) proves as much.
Up almost 53% year to date, NERD is displaying positive pandemic leverage, but there’s more to the story, including the stellar growth of PC games. Global gaming PC sales are expected to swell to $39.2 billion this year, representing 60% growth over the past half decade, according to SafeBettingSites.com.
Why It’s Important: “In 2015, the global gaming PC market hit $24.6bn in revenue, revealed the Jon Peddie Research data. High-end PC sales accounted for 45% of that value, followed by mid-range and entry-level gaming PCs with 30% and 25%
The Vanguard Technology ETF (VGT) is a very popular vanguard technology fund that tracks the market-cap-weighted MSCI US Investable Market Information Technology 25/50 Index. The ETF holds information technology companies and has a very strong performance track record. The fund charges a very low fee for a tech-based ETF at just 0.10%. The ETF has over $35 billion in assets under management and holds over 300 positions, making it substantially more diversified than most competing technology ETFs.
Portfolio Construction and Holdings
VGT is a technology ETF, so it’s no surprise that the Software & IT Services sector makes up around 51% of the fund. Of course, other technology sectors like computers & phones, and semiconductors also dominate the fund coming in at around a 40% weighting. Finally, the fund holds a few companies from multiple sectors like communications, electronics, and even some machinery & equipment, renewables, and
LONDON (Reuters) – Passive investors, the backbone of the Nasdaq’s rally this year, seem to have lost their nerve, pulling massive amounts of cash in recent days from index-tracking technology funds in what many see as an ominous sign for the sector.
With the tech-heavy Nasdaq 100 down more than 13% after a record 84% rally off March lows — in correction territory — many investors are speculating that a reversal could pick up speed as a COVID-19 vaccine gets closer.
Goldman Sachs, for example, predicts at least one vaccine will be approved by the end of this year. That should help broader markets but weaken the case for shares in companies that benefit when people are forced to stay home, whether cloud computing or e-commerce.
But exchange-traded funds, which accounted for most of this year’s tech sector inflows, may be the ones to