Wall Street is finding ways to trade the “special rebalance” of the Nasdaq 100 as the overconcentration of mega-cap firms breaches an upper limit in the tech-heavy gauge. They’re investing in QQQE.
The Direxion NASDAQ-100 Equal Weighted Index Shares saw investors drive $216.3 million into the fund in the latest session for which data is available, the biggest one-day increase since its inception in 2011, data compiled by Bloomberg show. The influx pushed QQQE’s assets higher by 27% to double to $1.01 billion, the highest level ever.
“With big tech stocks up so much this year, QQQE saw big inflows possibly on a leg down in some of those names and also with the Nasdaq composite rebalancing,” Mohit Bajaj, director of ETFs at WallachBeth Capital, said.
The inflows come after Nasdaq Inc. on Friday announced a “special rebalance” — the first ever of its kind — to redistribute the weight of the index’s members on July 24. The index provider in a statement said the adjustment will “address overconcentration in the index by redistributing the weights.”
“It makes sense just given the massive run-up that we’ve had in some of these stocks. You don’t want them to become the entire market,” Nadia Lovell, senior equity strategist at UBS Global Wealth Management, said. “I wouldn’t be surprised at some point if you see another rebalancing. I think this is going to be a continuous process.”
A handful of mega-cap tech shares have powered much of the stock market’s gain this year fueled by the frenzy surrounding artificial intelligence. Gains in the S&P 500 this year, in fact, have been more concentrated among its largest stocks than in any six-month period since the turn of the millennium, Bloomberg Intelligence analysis shows.
Following are the fund’s biggest holdings as of July 11:
Name
Ticker
Position
Value (USD)
Change in Position
% of Total Asset Value
Lucid Group Inc.
LCID US Equity
1.55 million
12.3 million
332,024
1.2
Sirius XM Holdings Inc.
SIRI US Equity
2.54 million
11.7 million
546,056
1.2
Old Dominion Freight Line Inc.
ODFL US Equity
30,791
11.5 million
6,608
1.1
Charter Communications Inc.
CHTR US Equity
29,400
11 million
6,328
1.1
Baker Hughes Co.
BKR US Equity
327,781
10.9 million
70,392
1.1
Marriott International Inc.
MAR US Equity
56,840
10.9 million
12,208
1.1
Paccar Inc.
PCAR US Equity
127,490
10.8 million
27,384
1.1
Idexx Laboratories Inc.
IDXX US Equity
20,690
10.8 million
4,424
1.1
Fortinet Inc.
FTNT US Equity
137,695
10.7 million
29,568
1.1
On Semiconductor Corp.
ON US Equity
111,141
10.7 million
23,856
1.1
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