QQQ Fund Lets Younger, Risk-Averse Investors Bet on Tech
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Here's your money briefing for Thursday, March 25th. I'm J.R. Whalen for The Wall Street Journal. You've heard about the trading frenzy in stocks like GameStop and AMC and the tremendous rise of Bitcoin and other cryptocurrencies. But at the same time, there's an ETF, an exchange-traded fund, that's quietly attracting a new generation of investors. It's called QQQ.
There's only a certain number of ETFs that have more than $100 billion in net assets. QQQ is one of them. It actually has close to $150 billion in net assets, as we saw last year.
Coming up, our personal finance reporter Julia Carpenter will explain the allure that this tech-focused fund has among younger investors, even when growth in tech stocks is leveling off. That's after the break.
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What is the QQQ ETF and why is it in the headlines now?
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Younger investors are pouring into a tech-focused ETF from fund manager Invesco called the QQQ. But QQQ isn't new. Many of these investors' parents probably invested in it decades ago. Our personal finance reporter Julia Carpenter has been following this, and she joins me now to discuss. Julia, thanks for being here.
Thank you again for having me.
Now, the QQQ tracks the NASDAQ 100, and that means it includes a lot of high-growth companies like Apple and Tesla, and it leaves out things like energy companies and banks like J.P. Morgan. And a lot of young investors have recently discovered it, but it's actually been around since the 1990s. So why so much interest in it now?
You're right in that QQQ did debut in 1999, kind of at the height of that dot-com tech bubble boom. We're seeing again all of this renewed interest in it, in part driven by Reddit forums like Wall Street Bets. Wall Street Bets talks about QQQ because those companies have been performing really well in the last year. I talked to one source who said, QQQ is one of, if not maybe the success story of the past year. When we pivoted to working from home, living from home, relying on technology for so much of our daily lives, we saw those companies perform really well and QQQ benefited as a result.
And just to put this in perspective, how big is this fund?
So it's definitely in an elite class. There's only a certain number of ETFs that have more than $100 billion in net assets. QQQ is one of them. It actually has close to $150 billion in net assets, as we saw last year. Because it's so big, we do see a lot of movement in and out of the fund. It's frequently traded. So in the last month, I think we've seen $1 billion leave the fund. That's people trading, rotating their investments to other places. I was asking people, is this a sign that maybe the fund will be performing differently in coming months? And it seems like we don't quite know yet. One source I spoke to said, you know, when you have $150 billion in a fund like this, $1 billion coming in and out of the fund every day is pretty typical.
But this is kind of a risky time to be in tech stocks. You know, they were high flying for a lot of last year, but now it's cyclical stocks or stocks that are now moving higher with the economic expansion.
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