“Apple (NASDAQ:AAPL) shares are down about 3% today as the fallout lingers over the iPhone 4 and customer complaints about reception. The company is expected to report third-quarter results on Tuesday. The weakness in Apple shares is bad news for one of the largest and most highly traded ETFs: The PowerShares QQQ Trust (NASDAQ:QQQQ),” John Spence Reports From Market Watch.
Spence goes on to say, “That’s because Apple (NASDAQ:AAPL), the fund’s largest holding, represents nearly 20% of assets. As of July 16, the ETF had a 19.1% stake in Apple, according to Invesco PowerShares. The fund’s tracking index is comprised of the largest 100 non-financial stocks listed on the Nasdaq. After Apple (AAPL), Microsoft (MSFT) is the next-largest holding at 4.5%. (QQQQ) established its reputation during the dot-com bubble when traders used the liquid ETF to jump in and out of the tech sector. Yet some investors may be surprised by the fund’s current outsized exposure to a single stock in Apple.”
“Morningstar analyst Patricia Oey in her latest QQQQ profile notes that the correlation in performance between the Nasdaq 100 and the S&P 500 is about 90% “even though there isn’t much overlap between the two indexes.” Indeed, the charts for QQQQ and SPY look eerily similar. She also noted that the “top-heavy” construction of QQQQ has “contributed to above-average volatility over time.” The ETF was down 3% for the year-to-date period through July 16,” Spence Reports.
Here is a closer look at the PowerShares QQQ Trust ETF (NASDAQ:QQQQ) below:
PowerShares QQQ Trust ETF (NASDAQ:QQQQ) Visit Our (QQQQ) Category: HERE
The investment is a unit investment trust designed to correspond generally to the performance, before fees and expenses, of the Nasdaq-100 index. The fund holds all the stocks in the Nasdaq-100 index, which consists of the largest non-financial securities listed on the Nasdaq Stock Market. The fund issues and redeems shares of Nasdaq-100 Index Tracking Stock in multiples of 50,000 in exchange for the stocks in the Nasdaq-100 and cash.