What Was QQQQ?

What Was QQQQ?

QQQQ was the original ticker symbol for the Invesco QQQ Trust, an ETF that trades on the Nasdaq exchange. This security offered broad exposure to the tech sector by tracking the Nasdaq 100 Index. The ticker QQQQ has since been replaced with its current ticker symbol, QQQ which it adopted in March 2011.

Understanding QQQQ

QQQQ no longer exists as a ticker symbol, having been shortened to QQQ in 2011. The exchange-traded fund is known officially as the Invesco QQQ Trust and was launched in 1999. QQQ still tracks the Nasdaq 100, a stock index listing the 100 largest Nasdaq companies by market cap. The Nasdaq 100 Index comprises companies from all sectors, with the exception of financial services. These industries include consumer discretionary, industrial, technology, health care, and others.

The current replacement of the ETF provides an especially viable investment choice for investors seeking exposure to the tech sector, because many of the largest companies listed on the Nasdaq are blue-chip tech behemoths such as Google (GOOGL), Microsoft (MSFT), and Qualcomm (QCOM).

All companies in the Invesco QQQ Trust must be listed on the Nasdaq 100 exchange for at least two years. However, there are certain exceptions to this rule. Namely, companies that have been listed for only one year but have extraordinarily high market capitalizations may make the cut.

All stocks need to have an average daily trading volume of 200,000 shares, and they are likewise required to report earnings on both quarterly and annual bases. Companies with bankruptcy issues are omitted from the Invesco QQQ Trust.

Composition of the Invesco QQQ Trust

While the Invesco QQQ Trust has a technology focus, it includes companies from various sectors and industries. Here are the sectors that it invests in, as of June 2024

Sectors

It's worth remembering that the Invesco QQQ Trust tracks just those stocks in the Nasdaq 100 Index. That's a limited number of stocks compared to other Nasdaq ETFs. Case in point: the popular Nasdaq Composite Index tracks every stock listed on the Nasdaq, including financial services names, which amounts to more than 3,000 public companies.

Here are the ETF's top ten holdings, as of April 3, 2023.

QQQ Advantages and Disadvantages

Advantages

Diversification: With a single investment, QQQ investors get exposure to the 100 stocks found in the Nasdaq 100 Index.

Cost: The relatively low .20% expense ratio won't diminish investors' returns as much as higher expense ratios found with other ETFs and mutual funds.

Attractive return potential: The focus on technology and transformative industries offers investors the possibility of higher returns compared to funds with less of a tech focus and greater diversification.

Liquidity: Millions of QQQ shares trade every day, making the ETF efficiently priced, and easy to buy and sell.

Disadvantages

Narrow focus: While QQQ is diversified, it owns only 100 stocks and the group is heavily weighted in technology industries.

Nasdaq stocks only: Those seeking tech sector exposure miss out on major tech stocks listed elsewhere, e.g., Oracle Corp., Salesforce, Uber Technologies, and SAP, which are on the NYSE.

Higher risk: The higher return potential of the tech sector can subject investors to greater volatility and greater sector risk.

Underperformance: Like any index fund, QQQ can underperform its target index due to fees and costs. Also, due to its composition, it may perform less well when the market declines than other ETFs/indexes, e.g., SPDR/the S&P 500 Index.

The Bottom Line

QQQQ is the former stock ticker symbol for the Invesco QQQ Trust ETF. It was shortened to QQQ in 2011. While the symbol changed, the ETF did not. It continues to attempt to track the performance of the Nasdaq 100 Index.