In simple terms, QQQQ ETF is the PowerShares Exchange Traded Fund that basically tracks the NASDAQ 100. Many investors, who trade in this ETF, often refer to the QQQQ ETF as simply the Q’s, the quad Q’s or the cubes in their respective short forms. Quire recently, the symbol for the ETF has changed from the former QQQQ to the present QQQ.
What is the NASDAQ 100 Index?
Prior to considering an index ETF as his investment strategy, it is always helpful for the investor to have knowledge of the underlying index. The NASDAQ 100 Index, also known as NDX, is made up of a collection that contains a list of 100 largest non-financial companies, which may be both foreign and domestic, and are listed accordingly on the NASDAQ exchange. Stocks that belong to the index have to be market-cap weighted. Nevertheless, certain limitations are placed on these weights in order to prevent a specific company from exercising excessive influence on the price. As a mandatory obligation, no single company is allowed to have over 24% of the total weight carried by the index.
What is in the QQQQ’s and NASDAQ 100?
The index cannot include a financial company. This is one of the first things that an investor must know. Should an investor be interested in trading bank securities and mortgages that are also listed in the NASDAQ, he will have to check the NASDAQ Financial 100 Index or IXF.
All companies that are shown on the Q’s and NASDAQ must have NASDAQ listed stocks. As a mandatory obligation, they have to be listed for a minimum period of 2 years. Some of the only companies who are exempted for this requirement are certain cap-wise heavy hitters, who must however have been listed for a minimum period of at least 1 year. Furthermore, their stocks have to be traded at the rate of 200,000 shares per day; they must file quarterly as well as annual reports, and they must also be free from any and all bankruptcy matters.
ETF and the Index are rebalanced on a yearly basis, and simultaneously in order to avoid any arbitrage. Each security’s price is established by trading on the last working day in each subsequent month of October every year, and the total number of its shares is accordingly based on the final trading day in November of each respective year.
The industries represented by the non-financial sector comprise of transportation, retail, health care, technology, biotechnology, telecommunications, media, services, and industrial. As far as companies in the index and fund are concerned, they include a number of popular firms such as MicroSoft, Teva Pharmaceuticals, Google, Qualcomm, and PayChex. For investors who are interested in an up-to-date and complete list, it can be searched through the NASDAQ website.
Distinct from the NASDAQ Composite Index (IXIC), QQQQ tracks stocks purely through the NDX that comprises of 100 companies only. The NASDAQ Composite Index keeps a track of all stocks that are listed as per the NASDAQ, which reflects a total of over 3,000 symbols.
