Popular QQQ ETF is losing steam this month - even as growth stocks outperform in 2024

MW Popular QQQ ETF is losing steam this month - even as growth stocks outperform in 2024

By Christine Idzelis

QQQ celebrated its 25th anniversary this month

Hello! This week's ETF Wrap digs into the performance of the technology-heavy Invesco QQQ Trust Series I, as investors eye the mixed performance of Big Tech stocks so far in 2024.

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The Invesco QQQ Trust Series I QQQ, the massive exchange-traded fund that tracks the Nasdaq-100 index NDX, is losing steam this month even as growth stocks continue to outperform this year.

Shares of the popular ETF, which trade under the ticker QQQ, slipped Thursday to end the session about flat so far this month, according to FactSet data. The fund is now clinging to a less than 0.1% gain so far in March, after advancing for four straight months.

The tech-heavy QQQ - which has a relatively large exposure to so-called Big Tech stocks, including artificial-intelligence darling Nvidia Corp. $(NVDA)$ - is slightly trailing the S&P 500 SPX this year.

QQQ, whose top five holdings as of March 13 included Microsoft Corp. $(MSFT)$, Apple Inc. $(AAPL)$, Nvidia, Amazon.com Inc. $(A)$(MZN) and Meta Platforms Inc. (META), has climbed 7.2% this year through Thursday.

That's lagging the S&P 500 index's 8% rise so far in 2024, according to FactSet data.

The SPDR S&P 500 ETF Trust SPY, which tracks the index, has the same top five holdings as QQQ but with smaller exposures to each, according to data as of March 13 found on the website of State Street Global Advisors.

QQQ, which this month celebrated its 25th anniversary, still comprises 23 of the companies it held at its launch on March 10, 1999, including Apple, Microsoft and Amazon, according to Ryan McCormack, senior factor and core equity strategist at Invesco. Nvidia was added to QQQ's holdings in 2001.

Apple, Microsoft Corp., Google parent Alphabet Inc. $(GOOGL)$ $(GOOG)$, Amazon, Nvidia, Facebook parent Meta and Tesla Inc. $(TSLA)$ are the Big Tech stocks that were referred to as the "Magnificent Seven" as they collectively skyrocketed in 2023.

Although Nvidia's shares have continued soaring in 2024, other stocks in the Magnificent Seven are sliding and trailing the S&P 500 this year. Shares of Apple and Tesla have dropped year to date, while Alphabet's small gains are lagging the U.S. equities benchmark.

Meanwhile, the Nasdaq-100 index grew its earnings, dividends and revenue faster than the S&P 500 over the 10 years through the end of 2022, McCormack said in a phone interview.

QQQ, which has $255 billion of assets under management, has exceeded the the S&P 500's gains since the Nasdaq-100-tracking fund launched 25 years ago, according to FactSet data.

Nvidia has always had high momentum in research and development and patent filings, a hallmark of the companies held by QQQ, according to McCormack. His research found that Nvidia's market value has swelled from $6 billion at the time it was added to the ETF to more than $2 trillion today, as the chip maker has benefitted from AI optimism.

Away from "pure" index funds, investors who are seeking actively managed strategies geared toward tech stocks might consider the JPMorgan U.S. Tech Leaders ETF JTEK, said Jon Maier, J.P. Morgan Asset Management's newly hired chief ETF strategist, in an interview.

Shares of the active ETF have risen more than 11% this year through Thursday, according to FactSet data. The fund's five biggest holdings are different from those held by QQQ and SPY.

The biggest weights for the JPMorgan U.S. Tech Leaders ETF were Nvidia, Meta, Advanced Micro Devices Inc. $(AMD)$, Amazon and Oracle Corp. $(ORCL)$ as of March 13, according to data on J.P. Morgan Asset Management's website. Unlike QQQ and SPY, the fund's top holdings did not include Microsoft and Apple as of that date.

Meanwhile, growth stocks are beating value equities so far this year.

Shares of the iShares Russell 1000 Growth ETF IWF have gained 10.1% in 2024 through Thursday, exceeding the more than 5% rise posted by the iShares Russell 1000 Value ETF IWD over the same period.

As usual, here's your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good...

   Top performers                                                                                                                                                                        %Performance 
   KraneShares CSI China Internet ETF                                                                                                                                                    8.8 
   Fidelity Wise Origin Bitcoin Fund                                                                                                                                                     8.7 
   Bitwise Bitcoin ETF                                                                                                                                                                   8.7 
   VanEck Bitcoin Trust                                                                                                                                                                  8.7 
   ARK 21Shrares Bitcoin ETF                                                                                                                                                             8.6 
   Source: FactSet data through Wednesday, March 13. Start date March 7. Excludes ETNs and leveraged products. Includes NYSE-, Nasdaq- and Cboe-traded ETFs of $500 million or greater. 

...and the bad

   Bottom performers                   %Performance 
   Sprott Uranium Miners ETF           -9.7 
   iShares MSCI India Small-Cap ETF    -7.6 
   United States Natural Gas Fund LP   -7.0 
   Global X Uranium ETF                -6.9 
   Invesco Semiconductors ETF          -6.2 
   Source: FactSet data 

New ETF

BondBloxx said Thursday that it launched the BondBloxx IR+M Tax-Aware Short Duration ETF TAXX, a fixed-income fund "designed to maximize after-tax income."

Weekly ETF reads

Grayscale files plans for 'mini' bitcoin fund, two months after GBTC's conversion to ETF (MarketWatch)Bond ETFs fall after fresh inflation data (MarketWatch)Junk bond ETFs outperform higher-quality U.S. fixed income (MarketWatch)Pimco files for its first mutual fund-to-ETF conversion (Financial Times)JPMorgan hires former Global X chief investment officer as ETF strategist (Reuters)BOJ Is Said to Mull Axing ETF Buys, Continuing Bond Purchases (Bloomberg)China's Biggest ETF Reaches $28 Billion on National Team Buying (Bloomberg)VanEck's Bitcoin ETF Sees $200 Million Inflow After Waiving Fees (Bloomberg)SEC Orders First Trust-SkyBridge to Declare Its Bitcoin ETF Application Abandoned (CoinDesk)

-Christine Idzelis

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March 14, 2024 18:29 ET (22:29 GMT)

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