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Designed to provide broad exposure to the Technology - Internet segment of the equity market, the Invesco NASDAQ Internet ETF (PNQI) is a passively managed exchange traded fund launched on 06/12/2008.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Internet is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $510.40 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Internet segment of the equity market. PNQI seeks to match the performance of the NASDAQ Internet Index before fees and expenses.
The Nasdaq CTA Internet Index is a modified market-capitalization weighted index designed to track the performance of the largest & most liquid U.S.-listed companies engaged in internet-related businesses & that are listed on one of the three major U.S. stock exchanges.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 40.30% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Alphabet Inc (GOOG) accounts for about 10.68% of total assets, followed by Amazon.com Inc (AMZN) and Adobe Inc (ADBE).
The top 10 holdings account for about 60.54% of total assets under management.
Performance and Risk
Year-to-date, the Invesco NASDAQ Internet ETF has lost about -40.80% so far, and is down about -50% over the last 12 months (as of 07/08/2022). PNQI has traded between $116.55 and $261.31 in this past 52-week period.
The ETF has a beta of 1.14 and standard deviation of 31.42% for the trailing three-year period, making it a high risk choice in the space. With about 81 holdings, it effectively diversifies company-specific risk.