Friday, 22 February 2013

Apple & QQQ Impact

Its well known Apple is a huge company, until few weeks ago, it was the largest in the world.  For many indices such as the Nasdaq and QQQ, this poses a problem as those indices are market cap weighted.

Due to Apple's size (and poor performance this year), those indices have dropped disproportionately vs the market.

QQQ is the Nasdaq 100 market cap weighted index and you can see how its performed poorly year to date at only 2.06% gain.

Recently a new ETF has opened up to rival QQQ as the premier Nasdaq ETF choice: QQQE.

QQQE is a Nasdaq 100 Equal Weighted Index which removes the disproportionate impact Apple and other large tech companies have.

As you can see below, QQQE has performed outstandingly in comparison, with a year to date gain of 8.1% (below chart is from Nov).  That's 4x the gain of the market cap weighted QQQ.

While its still a small ETF with relatively low liquidity, its a good option to keep in mind for the future.

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