First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)

ETF First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)

Profile:

QQEW is an exchange-traded fund (ETF) that tracks the Nasdaq-100 Equal Weighted Index. This index comprises the 100 largest non-financial companies listed on the Nasdaq stock exchange, weighted equally. This means that each company in the index carries the same weight regardless of its market capitalization.

Objective:

The primary objective of QQEW is to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Nasdaq-100 Equal Weighted Index.

Issuer:

The ETF is issued by First Trust, a global asset management firm with over $197 billion in assets under management as of January 31, 2023. First Trust has a strong reputation in the industry, being recognized for its innovative and thematic investment solutions.

Market Share and Total Net Assets:

QQEW has a market share of approximately 0.5% within the equal-weighted technology sector. As of November 6, 2023, the total net assets of the ETF are $3.17 billion.

Moat:

QQEW's competitive advantage lies in its unique equal-weighted approach. Unlike traditional market cap-weighted indexes, which favor larger companies, this strategy offers diversification benefits and reduces concentration risk. Additionally, the ETF benefits from First Trust's expertise in managing thematic investment products.

Financial Performance:

QQEW has historically outperformed the traditional cap-weighted Nasdaq-100 index, particularly during periods of high market volatility. Over the past 5 years, the ETF has delivered an annualized return of 15.22%, compared to 13.27% for the Nasdaq-100.

Growth Trajectory:

The ETF's growth trajectory is tied to the performance of the technology sector and the overall market. As the tech sector continues to innovate and grow, QQEW is expected to benefit from this trend.

Liquidity:

QQEW has an average daily trading volume of approximately 1.3 million shares, making it a reasonably liquid ETF. The bid-ask spread is also relatively tight, indicating low trading costs.

Market Dynamics:

The ETF's market environment is influenced by factors such as economic growth, interest rate policies, and technological advancements. Additionally, sector-specific news and events can impact the performance of the underlying companies.

Competitors:

The main competitors of QQEW include Invesco S&P 500 Equal Weight ETF (RSP) and Guggenheim S&P Equal Weight Technology ETF (RYT).

Expense Ratio:

The expense ratio for QQEW is 0.60%, which is considered average for actively managed ETFs.

Investment Approach and Strategy:

QQEW employs a passive investment strategy, tracking the Nasdaq-100 Equal Weighted Index. The ETF primarily invests in common stocks of the 100 largest non-financial companies listed on the Nasdaq exchange, with each company holding an equal weight.

Key Points:

• Equal-weighted exposure to the 100 largest non-financial companies on the Nasdaq exchange.
• Potentially higher returns compared to cap-weighted indexes during periods of market volatility.
• Diversification benefits and reduced concentration risk.
• Actively managed by First Trust.
• Moderate expense ratio.

Risks:

• Concentration risk in the technology sector.
• Higher volatility compared to broader market ETFs.
• Potential for underperformance during periods of market stability.

Who Should Consider Investing:

QQEW is suitable for investors seeking:

• Exposure to the Nasdaq-100 index with an equal-weighted approach.
• Diversification within the technology sector.
• Potential for higher returns and increased volatility.

Fundamental Rating Based on AI:

Based on an AI-powered analysis considering financial health, market position, and future prospects, QQEW receives a Fundamental Rating of 7.5 out of 10.

Justification:

The AI system recognizes QQEW's strengths in its unique equal-weighted approach, strong management team, and promising growth potential. However, it also acknowledges the inherent volatility and concentration risk associated with the technology sector.

Resources:

• First Trust Nasdaq-100 Equal Weighted Index Fund website: https://www.firsttrust.com/etfs/qqew
• Morningstar ETF report: https://www.morningstar.com/etfs/nasdaq/qqew/overview
• Yahoo Finance ETF page: https://finance.yahoo.com/quote/QQEW/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please consult a financial professional before making any investment decisions.