Should iShares Nasdaq 100 ETF (IQQ) Be on Your Investing Radar?

Why Large Cap Growth

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.1%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector -- about 58% of the portfolio. Telecom and Consumer Discretionary round out the top three.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 8.02% of total assets, followed by Apple Inc (AAPL) and Micron Technology Inc (MU).

The top 10 holdings account for about 45.28% of total assets under management.

Performance and Risk

IQQ seeks to match the performance of the NASDAQ-100 INDEX before fees and expenses. The Nasdaq-100 Index measures the performance of securities of the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on full market capitalization of a company.

The ETF has lost about 0.49% so far. In the past 52-week period, it has traded between $22.39 and $24.77.

With about 105 holdings, it effectively diversifies company-specific risk.

Alternatives

iShares Nasdaq 100 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IQQ is an outstanding option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Morningstar Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Morningstar Growth ETF has $226.61 billion in assets, Invesco QQQ has $486.10 billion. VUG has an expense ratio of 0.03% and QQQ charges 0.18%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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