QQQ

By: EconomyWatch   Date: 23 November 2010

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QQQ is the former ticker symbol of the NASDAQ 100 Trust Series, which is an exchange traded fund (ETF) that is traded on the NASDAQ. This ETF was formerly traded in the American Stock Exchange from where it was moved to the NASDAQ on December 1, 2004. This is when it was given a new four-letter code of QQQQ. This ETF is also referred to as the “cubes,” “Quad Qs” or simply “the Qs.” This ETF is sponsored and overseen by Invesco through PowerShares.

The NASDAQ 100 is a stock market index of the 100 largest domestic and international non-financial companies that are listed on the NASDAQ stock exchange. It is a modified version of the market value-weighted index. The companies that weight in this index are selected based on their market capitalization. Also, this index includes companies that are incorporated outside the United States. These features differentiate the NASDAQ 100 index from the S&P 500 and the Dow Jones Industrial Average.

 

How is QQQ Traded?

QQQ is traded in exchanges and corresponds to the price and yield performance of the NASDAQ 100 index. These are financial products and are traded in these exchanges just like stocks. These can be bought and sold through a broker and can be traded throughout the trading day. When you purchase a single share of QQQ, you instantly gain exposure to 100 of NASDAQ’s large cap growth companies.

NASDAQ 100 is abbreviated as NDX. The corresponding futures contracts of NDX are traded on the Chicago Mercantile Exchange. Its regular futures are denoted by the Reuters Instrument Code as ND, while NQ denotes its smaller e-mini version.

The NASDAQ has standardized the QQQQ by placing stringent rules that the companies must follow. These rules state that the companies should:

  • be listed exclusively on the NASDAQ in either of the two tiers - the Global Market or the Global Select.

  • be listed for two years.

  • have a daily volume of 200,000 shares.

  • not be in bankruptcy proceedings.

Benefits of QQQ

QQQQ is extremely useful for investing in the technology industry for its long-term prospects.

Risks of QQQ

Investing in QQQ involves interest rate risk, with a rise in interest rates causing the value of an investment to decline.


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