Invesco QQQ Is Magnificent, but This 1 ETF Might Be Even Better Right Now

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David Dierking, The Motley Fool

Tue, June 30, 2026 astatine 7:06 AM CDT 4 min read

For years, the Invesco QQQ ETF (NASDAQ: QQQ) has been 1 of the industry's elite performers. This performance, of course, has been heavy influenced by the overwhelming beingness of the U.S. economy's biggest innovators and tech companies.

If there's 1 ailment astir the fund, it's the attraction problem. Right now, astir 45% of the scale is represented by the apical 10 stocks.

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Data source: Invesco.

The occupation mightiness lone get worse erstwhile Space Exploration Technologies gets added portion Anthropic and OpenAI apt hold successful the wings. That's a batch of concern to beryllium making successful conscionable a fistful of stocks.

The amended thought mightiness not needfully beryllium to pivot distant from the tech assemblage altogether, but to diversify wrong it.

The Direxion NASDAQ-100 Equal Weighted Index ETF (NASDAQ: QQQE) uses the aforesaid scale arsenic the Invesco QQQ ETF, but weights the holdings equally. This elemental alteration to the scale operation helps alleviate overmuch of the attraction occupation and reduces the dense reliance connected conscionable a fewer companies to thrust returns.

Equal weighting reduces the Nasdaq-100's volatility and attraction problems

In the accepted marketplace cap-weighted mentation of the Nasdaq-100, tech accounts for 66% of the portfolio, and user discretionary adds different 18%. No different assemblage is adjacent astatine 4%.

In the equal-weighted version, tech is inactive a hefty 39% of the portfolio, but 5 different sectors get allocations of 8% oregon more. Plus, astatine rebalance, the apical 10 holdings volition lone relationship for 10% of the portfolio. Much much balanced and overmuch little top-heavy.

This is simply a premier illustration of however much diversification helps bounds risk. Using the 5-year beta arsenic a measuring stick, the Direxion NASDAQ-100 Equal Weighted Index ETF is astir 12% little volatile than the Invesco QQQ ETF. The removal of immoderate tech and megacap vulnerability has historically resulted successful a little volatile ride.

The archetypal nationalist offerings (IPOs) of the mega-AI companies are apt to lone marque the attraction occupation successful the tech assemblage adjacent worse. By fast-tracking these stocks into the indexes, galore funds volition request to bargain shares to support compliance with their mandates. That flurry of trading could marque these stocks and the indexes that way them adjacent much volatile successful the abbreviated term.

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