Is First Trust NASDAQ-100 Equal Weighted ETF (QQEW) a Strong ETF Right Now?

The First Trust NASDAQ-100 Equal Weighted ETF (QQEW), a smart beta fund with over $1.86 billion in assets under management, provides diversified exposure to large-cap growth by equally weighting NASDAQ-100 components, distinguishing it from traditional market-cap weighted funds. Launched in 2006, QQEW has an expense ratio of 0.55% and has delivered a 9.13% year-to-date return and 13.52% over the past year (as of 09/08/2025), exhibiting a medium risk profile (beta 1.07) with its largest sector allocation in Information Technology (38.8%).

Analysis

The First Trust NASDAQ-100 Equal Weighted ETF (QQEW) is a smart beta fund offering exposure to large-cap growth stocks by equally weighting the constituents of the NASDAQ-100 index. With assets over $1.86 billion, it is a sizable player in its category. Its core strategy differentiates it from market-cap weighted peers like Invesco's QQQ, significantly reducing concentration risk; the top 10 holdings in QQEW account for only 12.57% of assets, compared to the heavy concentration typical of the standard NASDAQ-100. The fund has delivered a year-to-date return of 9.13% and a one-year return of 13.52% as of September 8, 2025. Its risk profile is classified as medium, with a beta of 1.07 indicating slightly higher volatility than the broader market and a three-year standard deviation of 19.48%. A key consideration is its cost structure: the 0.55% annual expense ratio is substantially higher than the 0.20% for QQQ and 0.04% for VUG, creating a performance hurdle that must be overcome by its equal-weighting strategy. The portfolio remains heavily tilted towards Information Technology at 38.8%, underscoring its growth orientation despite the diversified weighting scheme.

Key Decisions for Investors

• Investors seeking to maintain exposure to the NASDAQ-100's growth profile while mitigating concentration risk in mega-cap technology stocks may find QQEW's equal-weighting strategy attractive.
• The fund's 0.55% expense ratio must be carefully weighed against the significantly lower costs of market-cap weighted alternatives like QQQ and VUG, as this fee difference will impact long-term net returns.
• With a beta of 1.07, this ETF is suitable for investors with a moderate risk tolerance who are willing to accept slightly higher volatility in exchange for the potential outperformance from non-mega-cap constituents of the NASDAQ-100.
• Monitor the performance of QQEW relative to QQQ, particularly during periods of market rotation, to validate if the equal-weight strategy and its higher fee are delivering alpha.