Invesco QQQ Sponsor Spotlight: The Innovation Engine

Bloomberg

Watch Invesco QQQ Sponsor Spotlight: The Innovation Engine - Bloomberg on Dailymotion

Transcript

00:00Paul is the QQQ equity product strategist for Invesco.

00:04Our sponsor spotlights the innovation engine,

00:07and I know that the Q is very much ladder up into that.

00:10So I'd love to start at the beginning,

00:11maybe not March of 1999 beginning,

00:14but I'd love a little bit of a refresher on what the Qs are.

00:16I think a lot of our audience probably owns them

00:18and has exposure to them, but just tell us about QQQ.

00:20Sure, so QQQ is an exchange-traded fund,

00:24and it is based on the NASDAQ 100 index.

00:28So what that means, it invests in the 100 companies

00:31that comprise the NASDAQ 100 index,

00:34which is the 100 largest ex-financials.

00:38Through the years, what we've seen QQQ really provide investors

00:41is exposure to high-growth companies.

00:45Today, it's most notably has exposure to MAG-7 companies,

00:51but if we go back a few years, there was high exposure to FanMag.

00:55Before that, it was FANG.

00:56So through the years, we've seen these highly disruptive

01:00and innovative companies make their way into QQQ.

01:05And really, what we've seen from these companies

01:08is that they've done a fantastic job of really transforming

01:11and innovating within the sectors that they're in.

01:14And what makes the NASDAQ 100, and by extension, the Qs,

01:19a great way to get exposure to the tech sector for investors?

01:22Sure. So the NASDAQ 100 index just celebrated its 40th anniversary this year.

01:28QQQ has been around for over 26 years.

01:31It really has become a fantastic way for investors,

01:36ranging from individuals all the way up to sophisticated institutions,

01:39to gain exposure to the tech sector through the years.

01:44It's the second most traded ETF,

01:46so a lot of people are using it as well as being the fifth largest ETF in the world.

01:51But I really think the reason why people have been using it through the years

01:55is that it really has provided a consistent way,

01:59a one-ticker solution, so to speak,

02:01to invest in these disruptive companies.

02:04And the question that we like to ask ourselves,

02:06why is that?

02:07Why does it seem that a lot of these NASDAQ 100 companies

02:11always seem to be at the center of some of these technologies,

02:14obviously, most recently, artificial intelligence?

02:17What we've seen is that a lot of these companies

02:20spend quite a bit on research and development,

02:22so we use that as a way to actually gauge innovation,

02:27research and development spending.

02:28And we see your average NASDAQ 100 company

02:30and extension QQQ company

02:33outspend your average S&P 500 company

02:35when it comes to research and development.

02:38But we dive deeper than that as well

02:40when we take a look at the patent activity

02:42that these sort of companies have.

02:44And we see, by extension,

02:46the fund through the company's patent portfolios

02:49that give you exposure to things like robotics

02:52and big data and cloud computing,

02:55these sort of thematic ideas

02:56that investors are looking to gain exposure to

02:59without having to dive into one specific company.

03:02Diversification, always the name of the game here.

03:06And obviously, the NASDAQ 100 brings us to conversations

03:09about technology specifically.

03:10But I'd love to talk about diversification within the Qs

03:14just because I realize it's not purely a tech play.

03:17Yeah, that's a great question, Mike.

03:18You did your homework.

03:19So, you know, what we've seen through the years

03:23is that the tech exposure can range between 50% to 60%,

03:2660%, depending, you know,

03:29what classification system you're looking at.

03:31But obviously, that leaves about 30% to 40%

03:34to other areas of the overall market.

03:38So what we've seen throughout the years

03:40is that we, what we like to say

03:42is we get this focus on technologically oriented companies

03:46that make their way into the fund

03:49because they list on NASDAQ.

03:51You know, great examples of this

03:53are like Intuitive Surgical or Gilead

03:57within the healthcare sector.

03:59You also gain exposure to other areas of the market

04:02that I think people would be surprised by.

04:05We have Costco as one of larger holding in there,

04:07along with PepsiCo,

04:08more traditional consumer staple companies.

04:11So I think the common theme, though, that we do see

04:15is that these companies have been leaders

04:18within their industry,

04:19not because they've stayed on the business model

04:22that have perhaps worked for the previous 20, 30 years,

04:25but they constantly are changing

04:27to the needs of their consumers

04:29and really have delivered from a fundamental basis

04:33where we see strong revenue

04:34and earnings per share growth.

04:36We'll see you next time.

Category

Transcript

Be the first to comment

Recommended