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Buckle up, investor thrill-seekers! Today, we're diving deep into the electrifying world of exchange-traded funds (ETFs) that dance to the beat of the NASDAQ 100. Prepare to explore the dynamic trio: QQQ, TQQQ, and QQQY. These aren't your grandma's investment vehicles – they're turbocharged, high-octane options for the modern investor.
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Now, let's take a look at these amazing ETFs.👇
When evaluating ETFs like QQQ, TQQQ, and QQQY, it's essential to understand their unique strategies, metrics, and potential benefits and drawbacks. These funds, rooted in the NASDAQ 100 Index, offer distinct investment opportunities and come with their own risks. Here’s a detailed comparison:
1. Overview of Each Fund
QQQ and TQQQ are integral parts of our IWA Quality ETF Portfolio. QQQ provides broad exposure to the NASDAQ 100, while TQQQ leverages this exposure to amplify returns. QQQY offers a different angle by focusing on high dividend yields through an options-based approach.
2. Investment Strategies
QQQ (Invesco QQQ Trust)
Objective: Aims to track the NASDAQ 100 Index, which includes the 100 largest non-financial companies on the NASDAQ.
Rebalancing: The fund adjusts its holdings quarterly.
Expense Ratio: 0.20%, indicating relatively low management fees.
Dividend Yield: Typically low, as the focus is on growth rather than income.
TQQQ (ProShares UltraPro QQQ)
Objective: Seeks to deliver three times the daily performance of the NASDAQ 100 Index. This is achieved through leverage, aiming to magnify returns.
Strategy: Intended for short-term trading due to its leveraged nature.
Expense Ratio: 0.88%, which is higher than that of traditional funds.
Dividend Yield: 1.09%, reflecting its role as a growth-focused leveraged fund.
QQQY (Defiance NASDAQ 100 Enhanced Options Income ETF)
Objective: Provides monthly income by using a strategy that involves writing 0DTE (zero days to expiration) put options on the NASDAQ 100 Index.
Expense Ratio: 0.99%, on the higher end due to its active management.
Dividend Yield: Remarkably high at 46%, targeting income through options premiums.
3. Key Metrics Comparison
QQQ:
Total Holdings: $268 billion, showcasing its substantial asset base.
30-Day Average Volume: $43 million, indicating strong liquidity.
Beta: 1.19, which suggests moderate volatility relative to the market.
Standard Deviation: 0.06, reflecting the volatility in its price movements.
TQQQ:
Total Holdings: $22 billion, which supports its high liquidity.
30-Day Average Volume: $68 million, showing its active trading.
Beta: 3.58, indicating high volatility, as expected from a leveraged fund.
Standard Deviation: Very high, due to the leveraged exposure.
QQQY:
Total Holdings: $248 million, relatively small compared to the others.
30-Day Average Volume: $511,000, pointing to lower liquidity.
Beta: 0.52, suggesting lower volatility than the broader market.
Standard Deviation: 0.03, reflecting minimal price fluctuations.
4. Sector Breakdown and Top Holdings
All three ETFs are based on the NASDAQ 100 Index, so their top holdings and sector breakdown are similar:
Top Holdings: Include major tech giants such as Microsoft, Apple, Nvidia, Amazon, and Google.
Sector Breakdown:
Technology: 50% of the fund's holdings.
Communications & Consumer Cyclical: Combined, these sectors make up 30% of the fund.
These holdings represent key drivers of market growth, particularly in the tech sector, which advancements like artificial intelligence have bolstered.
5. Pros and Cons
QQQ (Invesco QQQ Trust)
Pros:
High Liquidity: Facilitates easy transactions due to its large market presence.
Growth Potential: Benefits from the strong performance of leading tech companies.
Low Expense Ratio: Cost-effective with a 0.20% fee.
Cons:
Limited Dividend Yield: Focuses more on growth than providing income.
TQQQ (ProShares UltraPro QQQ)
Pros:
Significant Liquidity: Supports active trading with $22 billion in assets.
High Potential Returns: Can achieve substantial gains in positive market conditions.
Short-Term Performance: Often outperforms in favorable market trends.
Cons:
High Volatility: Beta of 3.58 indicates large swings in value.
Expense Ratio: Higher at 0.88%, reflecting its leveraged strategy.
Not Ideal for Long-Term Holding: Designed for short-term, active trading.
QQQY (Defiance NASDAQ 100 Enhanced Options Income ETF)
Pros:
High Dividend Yield: Offers a remarkable 46% yield, attractive for income-focused investors.
Lower Volatility: Beta of 0.52 indicates less price fluctuation compared to the broader market.
Cons:
High Expense Ratio: 0.99%, which may erode returns.
Low Liquidity: Smaller asset base and trading volume can impact transaction ease.
Recent Performance Concerns: Limited historical performance data and potential issues with fund stability.
6. Use Cases
QQQ: Ideal for investors seeking long-term growth with exposure to leading tech companies. Its stability and low cost make it a good foundation for a diversified portfolio.
TQQQ: Suitable for short-term traders looking to capitalize on market movements with a high-risk tolerance. It's not designed for buy-and-hold strategies due to its leveraged nature.
QQQY: Best for those looking for high dividend income, though it comes with higher risk and lower liquidity. It may not be suitable for all investors due to its relatively recent launch and high expense ratio.
Final Thoughts
Each of these ETFs offers distinct benefits and drawbacks depending on your investment goals and risk tolerance. QQQ and TQQQ are suitable for different investment strategies within the IWA Quality ETF Portfolio, while QQQY provides an intriguing option for those interested in high dividend yields.
Just a reminder: The world of investing offers countless opportunities. Whether you're after steady growth with QQQ, an exciting ride with TQQQ, or attractive yields with QQQY, there's an ETF out there to help you achieve your financial goals. So, make sure to conduct thorough research, evaluate your risk tolerance, and then confidently begin your investing journey. The NASDAQ 100 is waiting for you!
If you find this review helpful, you might also find our IWA portfolio useful. If you're interested in ETFs, take the first step towards a safer and more profitable investment journey by checking out our IWA portfolio today. ⬇.
IWA PORTFOLIO
On August 5th, during a particularly hectic and turbulent day in the market, I seized the opportunity to buy Nvidia. I had been patiently waiting to invest in it for a while, and now, just 10 days later, we're up 📊 +23%.
Patience and long-term thinking pay off.
Checkout our portfolio to check more of our gains after August 5th.
Causes of Lost Gains
Rapid recoveries: The best market days often follow the worst. Exiting during a drop means missing out on the recovery.
Cost of being out of the market: Being out during recovery days can be costly, as those days typically offset losses.
Psychological factor: Panic can lead to selling at the worst moment and re-entering when prices have already risen.
Key Lessons
Staying invested, even during volatile times, is crucial. Patience and discipline are essential to maximize long-term gains and avoid impulsive decisions that could harm the portfolio.
Access our daily trades from the three portfolios we manage.
IWA Quality Growth Stocks Portfolio
IWA Quality ETF Portfolio
IWA High Dividend Portfolio
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IWA Quality Growth Stocks Portfolio
One of my oldest investment portfolios was started during the pandemic. It's where I began paying attention to finding reliable stocks that could generate annual profits. As of August 6, 2024, we added Nvidia ($NVDIA) to our holdings. We couldn't resist shopping, and in fact, we funded multiple trading accounts across the globe. Some might call it panic buying of our target instruments.
Return YTD 16.51% ➡ 17.09%
Return 2Y 76.26% ➡ 77.14%
Profitable Weeks 54.55%
IWA Quality ETF Portfolio
It’s one of the newest portfolios, having just celebrated its first anniversary. We are pleased with its progress, as it's safe, reliable, and stable.
Return YTD 14.96% ➡ 15.42%
Return 2Y 49.12%
Profitable Weeks 60.00%
IWA High Dividend Portfolio
I am immensely proud of my holdings, which have grown from a small investment into a strong portfolio of 40 reliable stocks spanning stable industries, focusing on quality dividend growth.
Return YTD 9.64% ➡ 9.9%
Return 2Y 13.63% ➡ 13.9%
Profitable Weeks 55.36%
Portfolio Indicated Dividend Yield 2.66%
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