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Ryan McCormack, Invesco
Ryan McCormack, Invesco

QQQ enjoys 25th birthday and outperforming the S&P 500

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This year sees the 25th anniversary of Invesco’s QQQ, the USD240 billion ETF – the fifth largest ETF in the universe – that tracks the Nasdaq 100, which has enjoyed out-performing the S&P 500 and achieving the position of number one in performance over 10, 15 and 20 years in the Lipper Large Cap Growth category as of December 31, 2023.

Ryan McCormack, Senior Factor & Core Equity Strategist, ETFs & Indexed Strategies, at Invesco says that it is an important milestone for the product. “It’s an exciting time and last year we had stellar outperformance.  2023’s story boils down to QQQ’s exposure, and weightings to mega-cap growth companies helped drive performance.” 

2022 was challenging year for investors but early in 2023 the fund was perceived to be a good buying opportunity which rolled into the “abrupt entrance of AI”, he says. Current performance is 6.8 per cent and the fund has enjoyed USD6 billion of inflows year to date already.

Behind the ETF, the team looks at patents filed which, McCormack says, “gives us an interesting window on where companies are investing their time and resources. The team also looks at overlap between QQQ and thematic indices. For example, the overlap between QQQ and the Nasdaq Big Data & AI Index is 60 per cent, along with significant overlap among themes like robotics, future mobility, semiconductors and the metaverse. 

McCormack says that the patents are important, as it is an indication that companies are trying to develop intellectual property. Recently filed patents spanned across speech recognition, 3D graphics, automated cars and Natural Language Processing (NLP). “In the observed one-year period as of 11/30/2023, Nasdaq 100 Index companies filed over 40 per cent of global patents relating to NLP,” he says. “Looking at patents gives us a roadmap to what the future may look like.” 

In the AI race, Nvidia is a clear-cut winner with the increased demand and attention but there are other companies such as those found in QQQ’s siblings in the innovation suite. 

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