Tag Archives: Nasdaq-100

Qubes Ticker Changed Back to QQQ

Invesco PowerShares Capital Management changed the ticker symbol for its PowerShares QQQ ETF from “QQQQ” to “QQQ,” as of Wednesday.

Originally called the NASDAQ-100 Index Tracking Stock when it launched in 1999, it traded on the American Stock Exchange under the QQQ symbol. Traders called it “The Triple Q” or “Qubes” for short. In 2004, it moved to the Nasdaq Stock Exchange, where stocks are required to have four-letter tickers. PowerShares bought the fund in 2006, and to keep continuity with the old nickname rechristened it PowerShares QQQ. It will continue to trade on the Nasdaq, so the ticker change seems odd.

It’s possible that nothing symbolizes the euphoria of the stock market’s technology bubble better than this ETF.         The day it began trading — exactly one year to the day before the Nasdaq Stock Market hit its all-time high — it was the largest ETF launch in story. Within six months, it was the largest ETF in the world. It tracks the Nasdaq 100 index, which holds the 100 largest non-financial stocks on the Nasdaq, mostly technology, biotech and retail stocks. The expense ratio is 0.2%.

Not only does it have no financials, but also no energy stocks. Energy makes up more than 7% of other large-cap growth ETFs. Meanwhile, hardware, at 32% of the portfolio, and software, at 16%, are each more than twice the size of other growth funds, according to Morningstar.

On particular oddity about the fund is that Apple’s (AAPL) has an index weighting of 21%, while Microsoft (MSFT) is only 4%, despite the software giant  being 70% the size of the its rival. This bizarre weighting comes about because of a problem that needed to be solved before it launched in 1999. At that time, the top five companies represented two-thirds the weight of the index, and Microsoft more than 25%. This prevented the EFT from avoiding taxes like a mutual fund. So, the creators modified the index formula, lowering the weightings of the largest stocks to below 40%, then lifting the small stock weightings to make up the difference and regain preferable tax status. Ironically, at the time, Apple was one of the smaller stocks. Now that the computer maker is the second largest stock in the U.S. market, the boosted weighting it received when the fund began trading, has caused it to dominate the ETF.

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Qubes Celebrate 10th Birthday

The Qubes, one of the most famous ETFs in the world, celebrated its 10-year anniversary yesterday.

The PowerShares QQQ (QQQQ), formerly known as the Nasdaq 100 Index Tracking Stock, hit the market March 10, 1999, in what remains the biggest most successful launch of a single U.S. ETF. Today, it is one of the most actively traded securities in the world.

“It is the most traded security in shares and dollar volume over the last ten years,” says John Jacobs, executive vice president of NASDAQ OMX Global Index Group and the man who created the fund.

While it currently trades on the NASDAQ Stock Market, originally it launched on the American Stock Exchange with the ticker symbol QQQ. This gave the ETF, then called a tracking stock, the nicknames of the “QQQ”, the “Triple Q” and the “Qubes.”

Launched at the height of the Internet stock market bubble, the Qubes fed the investing public’s desire for an easy to trade instrument that held the fastest growing stocks in the world. The NASDAQ 100 index holds the 100 largest non-financial stocks listed on the NASDAQ. That’s a lot of technology, biotechnology and retail.

It’s first day, it traded 2.6 million shares, 53 percent more than the record set two years earlier by the DIAmond Trust (DIA), the first ETF to track the Dow Jones Industrial Average. After just two hours, the NASDAQ 100 ETF, blew away the DIAmond’s first-day total volume of 1.7 shares. Within two weeks, it had traded 30 million shares. At the end of 2000, the Qubes held more than $6 billion in assets. A little more than two months later, on its first anniversary, the Qubes held more than $12 billion.

For a while, it surpassed the assets and daily volume of the first ETF, the Standard & Poor’s Depositary Receipts, or SPDR Trust, (SPY). Yesterday, it held $10.26 billion in assets.

“The Qubes stellar rise signaled to Wall Street that exchange-traded funds were not just a one-hit wonder. It showed potential sponsors there was a market for these products if the index was right.” (For more on the birth of the Qubes, the history of the ETF industry, and why the NYSE refused to let this ETF use the single “Q” ticker symbol, grab a copy of ETFs for the Long Run.) A little more than a year later, Barclays Global Investors launched its iShares family of ETFs. By the end of 2000, there would be 55 iShares.

Ironically, on the Qubes’ first anniversary, March 10, 2000, the NASDAQ Composite Index, which tracks every stock on the NASDAQ, hit its all-time high of 5048.62. The Qubes posted a 12-month return of 125%. The next trading session, the Internet bubble popped, sending the entire stock market into a two-year decline.

On the tenth anniversary, the Nasdaq soared 89.64 points, or 7.1%, to 1358.28, and the ETF jumped $1.59, or 6.2% to $27.33 on volume of 175 million shares. Did the excitement over the Qubes anniversary spark a huge rally in the market? Don’t laugh so quickly. Currently, the NASDAQ-100 Index is the basis for more than 900 products in 34 countries with about $490 billion dollars in notional value tied to it. To date, the index has traded more than 600 million futures contracts with a notional value of more than $25 trillion. Options experts SchaeffersResearch.com says the Qubes saw call buying activity early yesterday.

Of course, Citigroup (C), one of the country’s largest banks, did raise its head from its deathbed to say it was doing very well the first two months of the year, sparking a huge rally in the financial sector. The Dow Jones Industrial Averaged surged 5.8% to 6926 and the S&P 500 leapt 6.4% to 720.

Invesco PowerShares bought the NASDAQ’s ETF business in 2006. It changed the name of the ETF to the PowerShares QQQ in honor of what most people called the fund. However, the ticker has changed to QQQQ because it trades on the NASDAQ Stock Market, which uses four letters in its tickers. The NASDAQ says its market share of U.S. ETFs is more than any other U.S. exchange. In January 2009, volume grew 22% year-over-year to 655 million shares.

The NASDAQ OMX Global Index Group, a unit of the NASDAQ’s parent company, the NASDAQ OMX Group, remains a global leader in creating and licensing strategy indexes. Its most recent being the Government Relief Index and the European Government Relief Index, which include companies currently being bailed out by their governments.