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Tech ETF Beats Nasdaq by Miles!
16 Jul
Summary
- Equal-weight tech ETF XNTK significantly outperformed QQQ.
- XNTK's strategy gives equal portfolio impact to diverse tech stocks.
- XNTK charges higher fees but delivered superior returns recently.
The SPDR NYSE Technology ETF (XNTK) has demonstrated superior performance against the Invesco QQQ Trust (QQQ), achieving a 51.65% return over the past year, significantly outpacing QQQ's 28.43%. Over a decade, XNTK's total return reached 808.69%, compared to QQQ's 536.62%.
XNTK tracks the NYSE Technology Index, comprising approximately 35 US-listed tech leaders. This index is equally dollar-weighted and rebalanced quarterly. This strategy diverges from QQQ's market-cap weighting, which gives greater influence to larger companies like NVIDIA. XNTK's equal-weighting ensures that mid-tier holdings have the same impact as the largest ones, capturing gains across a broader range of tech stocks.
The pure-tech concentration of XNTK means it includes companies like Broadcom and Palantir with the same portfolio weight as NVIDIA, even with differing market capitalizations. This approach has proven more effective in capturing AI rally momentum. However, XNTK's strategy comes with higher fees, nearly double those of QQQ, and it experienced a more significant drop of 42% in 2022 compared to QQQ's 34% decline.
