What Is QQQQ?
QQQQ is the originalticker symbol for theInvesco QQQ Trust, an ETF that trades on the Nasdaq exchange. This security offers broad exposure to the tech sector by tracking the Nasdaq 100 Index, which consists of the 100 largest and most actively traded non-financial stocks on the Nasdaq. Also known as "cubes" or the "triple Qs," it is now listed with its current ticker symbol, QQQ, which it adopted in March 2011.
Key Takeaways
- QQQQ is the original ticker symbol for the Invesco QQQ Trust, an ETF that trades on the Nasdaq exchange.
- The ETF, whose current ticker symbol is QQQ, is also known as "cubes" or "triple-Qs."
- QQQ offers broad exposure to the tech sector by tracking the Nasdaq 100 Index.
- The Nasdaq 100 Index tracks the 100 largest and most actively traded non-financial stocks on the Nasdaq.
- The ETF itself includes a very small percentage of financial services stocks, as of April 2023.
Understanding QQQQ
QQQQno longer exists as a ticker symbol, having been shortened to QQQ in 2011. The exchange-traded fund is known officially asthe Invesco QQQ Trust and was launched in 1999.It still tracks the Nasdaq 100, a stock index listing the 100 largest Nasdaq companies by market cap. The Nasdaq 100 Index comprises companies from all sectors, with the exception of financial services. These industries include consumer discretionary, industrial, technology, health care, and others.
The ETF provides an especially viable investment choice for investors seekingexposure to the tech sector, because many of the largest companies listed on the Nasdaq are blue-chip tech behemoths such as Google (GOOGL), Microsoft (MSFT), and Qualcomm (QCOM).
All companies in the Invesco QQQ Trust must be listed on the Nasdaq 100 exchange for at least two years. However, there are certain exceptions to this rule. Namely, companies that have been listed for only one yearbut have extraordinarily high market capitalizations may make the cut.
All stocks need to have an average daily trading volume of 200,000 shares, and they are likewise required to report earnings on both quarterly and annual bases. Companies with bankruptcy issues are omitted from the Invesco QQQ Trust.
The Invesco QQQ Trust was launched in March 1999. As of March 31, 2023, QQQ had $172.57 billion total assets under management.
Composition of the Invesco QQQ Trust
While the Invesco QQQ Trust has a technology focus, it includes companies from various sectors and industries. Here are the sectors that it invests in, as of April 3, 2023.
Sectors
| Information Technology | 49.49% |
| Communication Services | 16.41% |
| Consumer Discretionary | 14.71% |
| Health Care | 6.28% |
| Consumer Staples | 6.00% |
| Industrials | 4.33% |
| Financials | 1.19% |
| Utilities | 1.15% |
| Energy | 0.43% |
| Not Classified | 0.24% |
It's worthremembering thatthe Invesco QQQ Trust tracks just those stocks in the Nasdaq 100 Index. That's a limited number of stockscompared to other Nasdaq ETFs. Case in point: the popular Nasdaq Composite Index tracks every stock listed on the Nasdaq, including financial services names, which amounts to more than 3,000 public companies.
Here are the ETF's top ten holdings, as of April 3, 2023.
| 1. | Microsoft Corp. | 12.52% |
| 2. | Apple Inc. | 12.44% |
| 3. | Amazon.com Inc. | 6.17% |
| 4. | NVIDIA Corp. | 5.27% |
| 5. | Alphabet Inc. Class A | 3.73% |
| 6. | Alphabet Inc. Class C | 3.68% |
| 7. | Tesla Inc. | 3.62% |
| 8. | Meta Platforms Inc. Class A | 3.62% |
| 9. | Broadcom Inc. | 2.04% |
| 10. | PepsiCo Inc. | 1.92% |
QQQ Advantages and Disadvantages
Advantages
Diversification: With a single investment, QQQ investors get exposure to the 100 stocks found in the Nasdaq 100 Index.
Cost: The relatively low .20% expense ratio won't diminish investors' returns as much as higher expense ratios found with other ETFs and mutual funds.
Attractive return potential: The focus on technology and transformative industries offers investors the possibility of higher returns compared to funds with less of a tech focus and greater diversification.
Liquidity: Millions of QQQ shares trade every day, making the ETF efficiently priced, and easy to buy and sell.
Disadvantages
Narrow focus: While QQQ is diversified, it owns only 100 stocks and the group is heavily weighted in technology industries.
Nasdaq stocks only: Those seeking tech sector exposure miss out on major tech stocks listed elsewhere, e.g., Oracle Corp., Salesforce, Uber Technologies, and SAP, which are on the NYSE.
Higher risk: The higher return potential of the tech sector can subject investors to greater volatility and greater sector risk.
Underperformance: Like any index fund, QQQ can underperform its target index due to fees and costs. Also, due to its composition, it may perform less well when the market declines than other ETFs/indexes, e.g., SPDR/the S&P 500 Index.
Pros
Easy diversification with a single investment
Attractive return potential of tech sector focus
Highly liquid and priced efficiently
Low relative .20% cost
Cons
Diversified with just 100 stocks
Nasdaq-only tech stocks excludes returns of other tech companies
Volatility associated with tech industries
Underperformance potential from fees and in down markets
What Is the Difference Between QQQ and QQQQ?
QQQ is the stock ticker symbol for the Invesco 100 Trust exchange-traded fund. QQQQ is the ticker used previously and replaced in 2011.
What Are the Benefits of QQQQ?
Some of the benefits of QQQ include targeted and convenient diversification, the potential for greater returns compared to those offered by less transformative industries and companies, and the greater liquidity offered by an actively traded security.
Does QQQQ Pay Dividends?
Yes, it does. In fact, QQQ's target index's growth in dividends measured 433% over the 10 years from 12/31/2011 to 12/31/2021.
The Bottom Line
QQQQ is the former stock ticker symbol for the Invesco QQQ Trust ETF. It was shortened to QQQ in 2011. While the symbol changed, the ETF did not. It continues to attempt to track the performance of the Nasdaq 100 Index.
Article Sources
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