00:00So, why don't we start with a quick reminder of what Invesco QQQ actually is.
00:06Sure thing. So, Invesco QQQ is designed to track the NASDAQ 100 index.
00:12And the NASDAQ 100 index is comprised of the 100 largest non-financial stocks, or companies rather, listed on the NASDAQ Stock Exchange.
00:22We think the resulting portfolio exposure is one that really provides access to innovation for end investors in a single-ticker solution.
00:33You know, QQQ has a 26-plus-year track record, so launched in 1999.
00:39So, I think you could argue that it's innovative in itself, having been launched in really the nascent stages of the ETF industry,
00:47which I'm sure many in the room know has grown in a substantial manner.
00:53By assets, QQQ is currently ranked fifth overall as far as AUM is concerned globally, and it is the second most actively traded ETF.
01:04Yeah. Yeah, it's become one of the largest, you know, obviously in the U.S.
01:10When we first started working with Invesco, and we have had a long relationship with you, so thank you,
01:16I did a deep dive just to understand, like, where did the Qs come from?
01:21Do you know that answer?
01:23You know, enlighten me.
01:25So, NASDAQ, when they created it, gave it the QQQ, because a lot of the NASDAQ stocks ended in Qs,
01:33and so it was just sort of a ticker, it was the ticker that was used to trade it.
01:39And then Invesco recognized the power because traders began just calling it the Qs,
01:45and they recognized the power of that brand, and that became why it's known as, you know, the QQQs.
01:52Here we are, we learn something every day, right?
01:53It was a brilliant kind of almost accidental marketing.
01:58It wasn't a marketing move, but it was accidental in the sense that it became this powerful brand.
02:02So, anyway, in today's changing environment, which I think we all know is one that is quite active and changing,
02:14when Lisa said, where do you see things in 10 years, we were talking, like, where do we see things in five months?
02:20So, in today's rapidly changing economy, how are the holdings within QQQ adapting, evolving, changing?
02:30Yeah, so when we think about innovation at Invesco, we think primarily from a lens of research and development.
02:36So, and research and development spend of the underlying companies within Invesco QQQ.
02:42So, what we have found is that QQQ companies have a tendency to spend more in research and development
02:49when compared to, you know, other companies in the S&P 500.
02:52So, if you were to look at a headline index level, I think it's roughly 1.4 times the amount of spend on average
03:00that's spent by a QQQ company relative to an S&P 500.
03:04Further, if you were to strip out the 85 or 86 names that also fall within the S&P 500,
03:11that spread goes up to almost 12.5x.
03:15So, that has really been the kind of fuel that has given these companies the ability to be successful
03:23and stay ahead of changing consumer preferences and different trends.
03:28I think the other aspect is really they've been able to be nimble.
03:33A good example of that is, you know, a lot of the MAG7 companies that we see that have been driving,
03:38you know, a large part of performance for overall equity indexes in the last few years.
03:45They've looked very different than they did maybe 20 years ago, right?
03:49So, they've diversified their core business structures and segments
03:53and really just been able to actively reinvest and stay current.
03:58So, when it comes to investing in emerging technologies,
04:03where is QQQ looking outside of the technology sector per se?
04:09Well, one of the biggest misconceptions that we come across at Invesco is QQQ is a tech fund, right?
04:14Right.
04:15And to a degree, that's correct.
04:17You have a significant exposure within the portfolio that's tech,
04:20roughly 65% or 55% depending on the classification system you're using.
04:27But, you know, you...
04:27Which is down from what it used to be when it first started, right?
04:30Yeah, it changed. It ebbs and flows.
04:33Right.
04:33But what we've seen is, you know, you still have a sizable allocation towards telecommunications
04:39as well as consumer discretionary.
04:41Right.
04:42And if you look at the patent portfolios of these companies, you see a lot of...
04:46If you look at the main disruptive areas within the industry as far as tech is concerned, right,
04:52and even more broadly, you see a lot of the AI things as far as big data, natural language processing,
04:57but the exposure within the portfolio specific to healthcare is something that's differentiated.
05:02So you think bioinformatics, robotic surgery, nanotechnology.
05:07So it's something that we think is a diversifier within that portfolio
05:11and, you know, leads it to being really a good option as far as someone looking to get large cap growth exposure
05:20in a portfolio or even satellite exposure where they want to access that innovation
05:24and different kind of technologies and budding industries that are really encompassed within the broader wrapper.
05:31Yeah.
05:32When I was looking at the portfolio and how it's changed, it seemed to me that Invesco QQQQ is really looking for these transformative themes.
05:45So, you know, in the case that you're talking about here, how technology will transform healthcare, for example.
05:55Absolutely.
05:56And I think...
05:56Or mobile payments.
05:57That's another great example.
05:59And I think just the day and age we're in, right, technology really...
06:01It's a gray area because if you're in the financial services industry or if you're in healthcare, you know, pick your poison.
06:09You really need to be able to adopt technology to be successful in your own business and grow results.
06:17And the companies that are doing that well are the ones that will be successful and have been successful.
06:22You really need to be able to adopt technology to be successful in your own business and your own business and your own business and your own business.
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