Invesco QQQ Trust (NASDAQ: QQQ) has been attracting a lot of attention from investors, noting that it has a huge $360 billion in net assets. It is easily one of the largest exchange-traded funds (ETFs) an investor can buy into, and, clearly, investors are happily buying shares in it. There are two big reasons for that, but one of those reasons is also a potential warning sign. Here’s what you need to know.
As an index-tracking exchange-traded fund, Invesco QQQ Trust basically just mirrors the performance and characteristics of whatever index it follows. The index in this situation is the Nasdaq-100. It’s a fairly straightforward index to understand, given that it tracks the 100 largest nonfinancial companies that trade on the Nasdaq exchange. The holdings are market-cap weighted, as is the index.
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