It’s been a long time coming, particularly when considering the success of the Invesco QQQ Trust (QQQ) and the existence of at least two competing funds, but Invesco finally launched an equal-weight version of QQQ.
The Invesco QQQ Equal Weight ETF (QEW) debuted last week, serving as the issuer’s equal-weight alternative to the aforementioned QQQ and the Invesco NASDAQ 100 ETF (QQQM), which is the lower cost alternative to QQQ.
Invesco is the issuer behind the Invesco S&P 500® Equal Weight ETF (RSP), the largest ETF of its kind, as well as an expansive lineup of other equal-weigh ETFs, which is to say the firm knows what it’s doing with this methodology and that QEW hails from impressive stock. That may help advisors and investors get past some of the trepidation they often express with new ETFs. QEW which follows the Nasdaq – 100 Equal Weighted Index.
That gauge “includes the same 100 non‑financial companies as the Nasdaq‑100 Index but assigns each constituent an initial 1% weight. The index is rebalanced quarterly, offering investors a systematic way to broaden participation beyond the largest mega‑cap names and capture exposure across the full breadth of the Nasdaq‑100 universe,” according to Invesco.
QEW Is Relevant Right Now
As is often noted regarding new ETFs, these funds frequently face the hurdle of timing, but QEW may prove to be an example of a well-timed rookie ETF. While mega-cap growth stocks have retreated this year, concentration risk remains an issue for some advisors and investors.
Said another way, QEW’s brings a fresh, more diversified alternative to the cap-weighted Nasdaq-100 at a time when the top three holdings in that index combine more than 21% of its weight. As some market observers point out, languishing performances in the mega-cap growth arena could be just what the doctor ordered for lifting equal-weight indexes and ETFs.
QEW is the tenth ETF in Invesco’s broader QQQ suite, which also includes ESG, low volatility, options income, small-cap and other funds.
“QEW complements existing strategies within the Invesco QQQ Innovation Suite by offering a differentiated risk profile and an alternative, diversified path to the same universe of innovative companies,” notes the issuer. “With the launch of QEW, investors now have access to one of the most robust suites of Nasdaq‑100‑focused ETFs in the market – spanning mega‑cap concentration, next‑generation innovation, low volatility, option overlay, and now equal weight.”
More on Timing
Potentially adding to the allure of QEW right out of the gate isn’t just waning momentum for mega-cap tech stocks, but inklings that a value rebound is increasingly credible and that smaller stocks are showing signs of the same could put eyeballs on the new ETF.
Equal-weight ETFs and the weighting scheme in general have their critics, which usually hang their hats on the methodology leaning into the size and value factors. However, those criticisms are ancient and not surprisingly quiet when value is in style.
QEW charges 0.25% per year, or $25 on a $10,000 investment.
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