QQQ Turns 25

The legendary ETF changed how millions invest

Ric Edelman: It's Friday, March 8th. On today's show, it's the 25th anniversary of QQQ. One of the most successful and influential ETFs in history. And we're going to talk with Paul Schroeder, the product leader of the Q's. But first are you satisfied with your college degree. There's a new survey out that asked 1000 US adults if they're happy with their college degree. Did getting your degree lead to personal fulfillment? Did it prepare you for the job market, or do you regret what you studied and the results? 44%. Nearly half of us adults regret their college major. The people most unhappy, education and business majors. The happiest people are those who have degrees in arts and science, technology, engineering and math, the Stem majors. These results are pretty much the same for men and women and for all age groups Gen Z, millennials, Gen X, and Baby boomers. Can you guess the number one reason people say they now regret their college major? Well, let me first tell you the number two and number three reasons, because I bet these are what you think are the number one reason. Coming in at number two, the number two reason people say they regret their college major lack of job opportunities, 23% said that. And the third most common reason. Jobs that have low pay, 21% said that. So, 44% say they regret their jobs because they're unhappy with their careers, either a lack of jobs or a lack of pay in those jobs. 

I bet you thought those were the top reasons for regret among college grads. But no, the number one reason people say they regret their college major. People simply say they are more interested in other subjects than the field they selected. 56% say that more than half of all college grads. Look, you're not supposed to follow your passion when pursuing a degree. Passions are for hobbies, not careers. But at the same time, you're not supposed to abandon your interests. A famous saying is that if you choose a job you love, you'll never work a day in your life. Did you blow that? Why? How? Were you trying to meet expectations of your parents or friends? Did you wander aimlessly in college and just wind up somewhere? Did you pick a major simply because it supposedly offered safety? I remember when we were young, Gene's dad telling her to get her teaching certificate so she'd always have something to fall back on. Gene wisely rejected that advice, of course, but how many people did that? They chose a major simply because it sounded safe or attainable. Only later to discover that there aren't very many jobs in that field, or the pay stinks, or other aspects of the job were undesirable. 

If you need any further motivation to choose a major, choose a degree that matters. Consider this. Another study just came out that looked at 10 million people who graduated over the past ten years, and half of them are in jobs where their degrees weren't needed at all. Even steam degrees don't guarantee employment in fields that require them. 47% of the people who majored in biology and biomedical sciences are underemployed five years after graduating. We all know how stupidly expensive it is to get a college degree, student loan debts now $1.7 trillion. And it's even worse than that. We now realize that colleges have been colluding with each other to minimize the amount of financial aid they give to their students Dartmouth, northwestern, rice, and Vanderbilt. They are now paying $166 million. They're the latest colleges and universities to admit that they colluded with each other in awarding financial aid to students. The University of Chicago, Emory, Yale, Brown, Columbia and Duke. They already paid over $100 million, and seven more are still in litigation over it. Caltech, Cornell, Georgetown, Johns Hopkins, MIT, Notre Dame, and the University of Pennsylvania. Collectively, the college endowment fund at these 17 schools is $224 billion. All of this explains why nobody's complaining about Peter Thiel anymore. Why were they complaining about Peter? I'll tell you in 60s. 

Since 2011, Peter Thiel has been paying high school students not to go to college. He's been awarding grants of $100,000 to some of the nation's brightest high school seniors, encouraging them to immediately start a business instead of wasting 4 or 6 years getting a college degree. When Peter started that program 13 years ago, he was hit with massive criticism. But since then he has now backed nearly 300 people, and some of them have created very successful companies. Vitalik Buterin, the co-founder of Ethereum, Laura Deming, who's now a major venture capitalist in aging and longevity. Austin Russell, who founded Luminar Technologies. Paul GU of upstart. Boyan Slat, the CEO of the nonprofit Ocean Cleanup. Given all their successes and everybody's unhappiness with their college experience, you know, careers they don't like, degrees that aren't helping, incomes that are too low, student debts that are too high. It's easy to see why college enrollment is now at the lowest level in 20 years. And speaking of those college debts, one thing I think that all college grads agree on is that they hate their student debts. But for lots of them, Joe Biden to the rescue. He's just forgiven another $1.2 billion in student loans. He's now given a total of $138 billion for 4 million borrowers. And he says he's not done. During the 2020 election, he promised to forgive tens of thousands of dollars in student loans per person, and he implemented a program after he got elected, which the Supreme Court then killed. 

But as Joe Biden himself now says, quote, that didn't stop me. And you can see why this is such a controversial subject. Joe Biden seems to be buying votes. Those 4 million people you would assume are pretty happy that they don't have to repay their student loan debts, debts they obtained voluntarily, while those who aren't beneficiaries of Joe Biden's largesse. Frankly, he's being largesse with our taxpayer money. But think about it. If you didn't go to college, you're not getting any benefit. If you went to college and paid cash, you're not getting any benefit. If you went to college and had your parents pay, you're not getting any benefit. If you had your parents go get a mortgage or take out a loan from their 401 K or get a second job, you're not getting any benefit. This is only benefiting the people who decided to ignore the cost of college. Choosing a really expensive school, going after a degree that in the end they really didn't want. Discovering it doesn't pay very well or isn't very interesting, and they are now looking to Joe Biden to alleviate them of the responsibilities of repaying a debt they voluntarily decided to obtain. 

And now Congress is reducing expansion of Pell Grants. This is money the government gives to low income students. Republicans say they don't want to keep giving away free college tuition. But here's the thing if you don't give that student the Pell Grant, that student will just go get a student loan, which Joe Biden will later forgive. Either way, the kids going to college for free. The sad irony here is that Joe Biden really isn't canceling anything. He's simply shifting the burden of this debt from the people who took out the loans to the rest of us, us taxpayers. At $138 billion that those 4 million people don't have to repay. There's 200 million other people who now have to repay it on their behalf. People who are fair minded hate the fact that Joe Biden has given away $138 billion to people who took out student loans. It's a blatant attempt to buy their votes in November. But meanwhile a lot of the people who want their student loans forgiven are angry at Joe Biden because he's not forgiving their loans, too, or he isn't forgiving as much of their debt as he promised during the last campaign four years ago. No matter how you look at it, the college crisis is going to be an issue in this year's election. So for you, you need to have a conversation with your kids or grandkids. 

If you're a financial advisor, you need to talk with your clients so they can have the talk with their kids or grandkids, or maybe let you talk to them about their decision, whether or not to go to college, what college to go to, what major to select. Otherwise, your kids or your client's kids could be facing a lifetime of regret that you right now can help them avoid. I want you to know that Wealth Management Convergence, which I've created, is coming to West Palm Beach this Sunday, March 10th through Tuesday, March 12th. It's exclusively for financial advisors. You'll get the investment strategies you need today with no breakout sessions, no PowerPoints, and only financial advisors and Ria firms allowed to register.  You'll learn from some of the most successful people in this business with conversations on generative AI, exponential technologies, longevity, estate planning, crypto a whole lot more free one-on-one meetings and dine-arounds with plenty of CE credits. It's West Palm Beach, this Sunday through Tuesday. I’ve got a promo code for you two exclusively for advisors listening to this podcast. Use this link to register. Discount code WMC2024. You'll save $100. Coming up next, we're going to talk with Paul Schroeder, the product leader of QQQ. 

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This is The Truth About Your Future, and sometimes you've got to go into the past. And this is an exciting opportunity to do that, because we have just hit the 25th anniversary of something pretty important that I'm not sure you realize how important this is or how monumental, but it's worth talking about. And to help us do it, I'm bringing on to the program Paul Schroeder. He is the equity product strategist for the Q’s, and if that isn't a household name for you, it surely will be.  Paul, welcome to the show. 

Paul Schroeder: Thanks for having me, Ric. 

Ric Edelman: The Q’s are now 25 years old. I'm flabbergasted by this, but while a lot of financial advisors listening to this conversation are going to immediately realize the importance of this monumental milestone, a lot of consumers who are tuning in might not recognize the significance of this. So let's begin at the very beginning. Paul, you are the equity product strategist for the Q’s for Invesco, one of the largest ETF providers in the country, and the Q’s QQQ, affectionately known as the Q’s, that's the ticker symbol QQQ. The QQQ ETF is one of the most important significant ETFs ever, and it is now 25 years old.  Talk about the history of the Q’s, how they came about, why there's such a big deal. 

Paul Schroeder: Sure. So, thanks for having me on Ric. It's always a pleasure to speak with you. So, as you mentioned, the Q’s turn 25 here and the inception date on the Q’s is March 10th of 1999. So, it's one of the oldest ETFs that are around. There are obviously a handful of ETFs, as ETFs really were born in the 90s and grew to prominence throughout the 2000’s, the Q’s have played a pivotal role within that space. 

Ric Edelman: This is a really a big deal because prior to the introduction of ETFs in the 1990s, everybody was using mutual funds and mutual funds, which are themselves are an important innovation, they've been around since the 1920s. The law codifying mutual funds was the Investment Company Act of 1940. These things have been around for decades and decades and decades. We're pushing half a century.  And for all their benefits: diversification, professional management, mutual funds had a particular couple of problems. Number one, you don't really know what they own because they only publish their holdings twice a year, semiannually and annually. And by the time you get the report of their holdings, it's way out of date. Second, they only price their funds once a day when the market closes. So, if you make an order to buy shares of the mutual fund at 11:00 in the morning, you're not getting the price as of 11 in the morning, you're getting a price as of 4 p.m. later that day, when who knows what the price might be. So, there are a couple of inherent problems.  They’re also, by the way, pretty expensive compared to alternative opportunities. Along come ETFs, and Invesco was one of the earliest innovators of ETFs, exchange traded funds, and revolutionized the fund industry. And these products are cheaper. They're as much as 90% cheaper than some mutual funds are. They are transparent, you know, all the time what they own and they trade in real time. If you place an order at 11 a.m., you get the 11 a.m. price. You don't have to wait till 4 p.m. to find out what you got. So ETFs are a radical improvement over mutual funds. And Invesco not only pioneered this along with several others, you then launched 25 years ago, QQQ.   This itself was an innovation within the innovations themselves. So elaborate for us on how QQQ works and what makes it so special. 

Paul Schroeder: Sure. So, I appreciate you interjecting there. Ric. You know, you're exactly right. ETF’s , we say, really provide three things liquidity, cost efficiency and tax effectiveness. So, thank you for adding that color, but specific to QQQ, it tracks the Nasdaq 100 index, which is the 100 largest non-financial companies listed on the Nasdaq stock exchange. And really, the Q’S have been able to remain relevant throughout the years because Nasdaq has done a fantastic job of attracting innovative and technologically focused to list on their exchange. If you think back to really the first  ETF that was launched, which tracks the S&P 500, which is broadly used as just a broad benchmark of the US equity market these days, the Nasdaq 100 and QQQ provided targeted exposure really to the large cap growth bucket, and it has done so over the last 25 years. 

Ric Edelman: It doesn't sound like much today, but back when Invesco did this, this was a revolutionary thought because most companies tended to trade on the New York Stock Exchange, and it was a bit of a status symbol. If your company went public and you listed on the NYSE. Going to Nasdaq, that was for smaller companies that didn't meet the criteria of the NYSE, or they just didn't have enough trading volume, or they weren't a big enough company. And Nasdaq was kind of like the second best. It was just considered the little sister compared to the big brother of the New York Stock Exchange. But what ended up happening is that this is where the small, innovative technology companies ended up. And suddenly we begin to realize that that's where they all are. And Invesco championed this by saying, we can create an ETF that owns all of these companies, the top 100 of them. Let's strip out the banks, you know, the financial stocks, and let's just own the technology stocks. The top 100 of the Nasdaq isn't very different than the bottom 500 of the NYSE in terms of quality and potential and management and product innovation, etc., and nobody had ever thought of doing something like this. It was revolutionary at the moment. You did it. And now, 25 years later, has it worked? Has this fund delivered on the returns that everybody was hoping for 25 years ago? 

Paul Schroeder: I definitely think it has Ric you know, obviously the late 90s, early 2000, there was a lot of concern around technology with the tech bubble and everything. And what we've seen really since then is that the Nasdaq 100, and QQQ has outperformed the broader market. It's outperformed broader growth benchmarks as well. You know, if we were to put some numbers behind that through yesterday's close from QQQ’s inception, it's outperformed the S&P 500 by about 2% annually on a cumulative basis, that turns out to be about 375%, which is pretty astounding. So, we've seen many different types of investors use the Q’s as their growth engine of their portfolio, especially over the last 5 to 10 years as small cap companies have struggled to gain a footing. 

Ric Edelman: So, it's really a very compelling story. And really this has had a huge impact on the entire ETF industry. In terms of companies that offer ETFs, the diversity of these products, the focus on technology, which everybody now acknowledges, you know, this is where it's all at.  We're in the 21st century, technology is driving every aspect of life on the planet at this stage. And the Q’S represent really the leader in this entire space. Talk about how the innovation of this technology, and I'm referring to the ETF technology itself, the investment management platform, as well as the strategy of choosing these kinds of stocks for your portfolio. Talk about how this has influenced broader investment strategy that financial advisors now routinely use for their clients. 

Paul Schroeder: Sure. So answering your first question as to how, you know, ETFs have really impacted the way that financial advisors and I would even extend that out now to how individual investors construct their portfolios outside of all the different things, Ric, that you mentioned earlier, with liquidity, intraday liquidity, you know, cost effectiveness, it really has provided advisors and individual investors a way to target specific areas of the market and not go out and have to buy either an index based mutual fund or an active strategy that tends to be more expensive, and research has shown, has underperformed broader benchmarks. So, the ETF wrapper as a whole, I think, really has democratized investing. QQQ has been around during that time, as we've seen the rise of the individual investor. You know, to your point, if we take a look back 26 years ago in order to get exposure to the Nasdaq 100, an individual investor would either have to place a mutual fund order with either a front or back end load with a high initial investment, and have it execute at the end of the day, or they'd have to call their broker, pay a huge amount in commission and buy 100 stocks, and then have to go through the issues of rebalancing on a quarterly basis, like the index does. And now people can do it on the go from a mobile app and buy as little as one share if they wanted to. 

So it's really brought investing to the masses. I think the other key part of it is the intraday liquidity of it. QQQ is the second most traded ETF in the world. It's not unusual to see 20 billion in notional value of Q’s trade on any given day. You know, depending on what's going on in the market. So, the Q’s are also used by sophisticated and institutional investors to gain access to the Nasdaq 100 over shorter periods of time without having to worry about higher costs of trade in the intermediate time. To answer the second half of your question, Ric, as to how these companies have innovated and changed. Really, the Q’s have really been at the center of it that the companies have. If we think back to some of the technologies that have changed the way that we live and work and have the potential to change those things in our day-to day lives. Q’s companies have really been at the center or adjacent to a lot of those technologies. You know, we think of the rise of the internet, the introduction of social media, the pivot to people using smartphones, along with more recently, the focus on AI. Q’s companies have played a primary role in bringing those to market, whether it's straight to the consumer or to other companies, business to business. So overall, we get the question why? Why is that? Why does it seem that a lot of these Q’s companies are at the right place at the right time? Well, they've taken the time and they've spent a lot of money to be nimble, adapt as times have changed and really skate where the puck is going. 

Paul Schroeder: And we like to say they're very innovative now, you have to be able to quantify that innovation. If you don't quantify the innovation Ric, it's just a marketing term, you know, at the end of the day. So, we here at Invesco and our partners at Nasdaq quantify innovation through two different metrics. Really, it's research and development spending. And it's also patent activity. And what we've seen from your average QQQ company, it's outspending your average S&P 500 company in research and development spending by about 2 to 1. You know, last year we saw your average QQQ company spend over 17 billion on research and development, which is over 10% of revenue coming in, which is, as you know, a very large amount. The interesting thing, though, is if we take out the QQQ companies from the S&P 500, that multiple goes up to about 15 to 1.  So, what we're seeing is that these Nasdaq listed QQQ companies really are the cream of the crop of the broader market when it comes to innovating and focusing on keeping their businesses relevant going forward. The second metric that I mentioned was patent activity. 

Paul Schroeder: You know, research and development is a spend. It's an expense at the end of the day, and it's something that isn't going to necessarily add to your bottom-line next quarter or the quarter after. It's something that is more than likely a multi-year investment into what will hopefully be a revenue center for your company in the future. Along the way, though, we'd like to see patent activity. You know, these companies are working very hard, spending a lot of money, hopefully to develop new technologies and file patents. Patents obviously have a value. They typically fall within intangible assets, but it's something that isn't typically brought into the normal valuation picture.  So what we see is that because these intangible assets do have value, sometimes in certain cases you see valuations higher than what they actually should be for some of these companies depending on their patent activity. But I think more importantly, you see activity within patents that are adding to the bottom line today. But hopefully we'll be adding to the bottom lines in years to come. One that pops in my mind right now is natural language processing. Obviously, that's very adjacent to artificial intelligence. QQQ companies filed 40% of all natural language processing patents in the world. You know, that's just one example of these thematic or disruptive technologies that Q’s companies have really illustrated, uh, a propensity to focus on. 

Ric Edelman: One of the things you mentioned earlier in passing I want to elaborate on, you and I both mentioned the advantages of ETFs over mutual funds. We talked about they’re transparent, that they are low in cost. They are affordable. You tossed in a phrase tax efficient. That is clearly a huge additional advantage that ETFs have over mutual funds. It's worth elaboration. So, talk about why ETFs are tax efficient. How do they operate that makes them operate that way. Sure. 

Paul Schroeder: So, it comes down to the actual structure and the rules that an ETF has to follow versus what a mutual fund has to follow when it comes to buying new shares and selling shares of that actual mutual fund. So as an example, Ric, let's say you're a mutual fund company and I want to buy some of your shares. I give you my money and you go out to the market and you buy the needed stocks to give me the shares that my portion of money would represent. Sometime later, I want to sell. So, I give you the order to sell Ric at the close, you strike the Nav for your mutual fund and you give me that amount of money. You though, Ric have to go out and sell the shares of the underlying companies, which inherently can and has the potential to create a taxable event. Mutual fund companies just like individual investors, when you. sell a stock, you have the ramifications of a potential capital gain. 

Ric Edelman: And this is why virtually every mutual fund issues a capital gain distribution at the end of the year because of all this trading throughout the year. 

Paul Schroeder: You're exactly right, Ric. And I think back to 2022, where I think a lot of mutual fund companies had to have difficult conversations with their clients where we had the biggest decline in the market that we saw since Covid in March of 2020, and some of these companies had to pay out capital gains and people were taxed obviously, on those.  

Ric Edelman: Yeah, so how do you explain that to a client where, hey, guess what? Not only did you lose money this year, you have to pay taxes. 

Paul Schroeder: Exactly. They're difficult conversations that I've had to have in the past, and it doesn't necessarily feel good. You know, as the investor, you feel like you're losing on both ends. So introduce the exchange traded fund, and the exchange traded fund follows a different set of rules. And the fantastic part of it is that outside of the intraday liquidity, when an ETF has to buy or sell shares of their fund to meet buy and sell orders from their clients, they can do this in what's known as a custom basket. So it's done on a regular day here at Invesco and several other ETF providers where Ric, let's say you own 100 shares of QQQ, you place the order to sell on whatever broker you're using and authorized participant, which acts as the intermediary between the end investor and Invesco, will more than likely aggregate a bunch of sell orders and go to Invesco and say, hey, I have this basket all these clients want to sell. Can I do a redemption? And what Invesco is able to do is that they're able to deliver the underlying shares of QQQ to that authorized participant or market maker in order to meet that cash need that the investor has. So, in effect, that cost basis is able to follow the shares out of the fund, and we don't have to recognize a taxable event. QQQ has successfully done this going back to 1999, where it hasn't paid a capital gain despite having the fantastic performance over the last 25 years, has never had a capital gain distribution to its investors. Now I have my legal team in my ear. I do have to say that doesn't guarantee that we will not have to pay out a capital gain in the future, but assuming these rules don't change, you know, QQQ has had a great track record with this process. 

Ric Edelman: So this is yet another reason for choosing ETFs over mutual funds. Pretty powerful stuff. So with all of this in mind that we've talked about, how should financial advisers as well as individual investors think about using QQQ in their diversified portfolios? 

Paul Schroeder: Sure. So the way that I think of QQQ, I mean, depending on what sort of approach that you take with constructing your portfolio, even in the light of the introduction of factor based investing, thematic investing, etc., I think it's pretty straightforward that QQQ goes within the large cap growth bucket and has done so for some time, and that's really the way that I position it overall. But I think the interesting thing is that outside of your large cap growth bucket, as I mentioned before, if you take a look at the different patents that the companies are filing as well, you take a look at even a simple overlap of QQQ versus some of these other thematic investment ideas that are that are out there right now. QQQ can be used as a thematic tactical play as well, you know, and it's something where I think from an individual investor standpoint, individual investors have a lot of good ideas, they want to invest in very specific themes. And very often individual companies, you know, these companies do a fantastic job of marketing to their consumers, and there are many times where investors may purchase an individual company without knowing, perhaps the company’s coming up to, let's say, like an earnings season announcement or something happens out of the blue. I think of a company like Tesla, which you have a CEO that may rip off a tweet that has no bearing on Tesla's business. But, you know, the investment community might not like what he says and Tesla stock falls back. So you're able to take off some of that single stock risk while still getting exposure to a specific theme by using QQQ. 

Ric Edelman: From your observations and conversations with financial advisors when they do use QQQ, what percentage of a portfolio would they typically allocate to it? 

Paul Schroeder: I think I'm a little biased. Ric. You know, I think it should take up as much as your portfolio as possible. You know, I run a paper where we replace the S&P 500 altogether and we combine QQQ with our S&P equal weight strategy to go as your core, which shows that, you know you get better risk adjusted returns throughout time. But I think depending, you know, taking a look at like a 60 over 40 portfolio, you know, you figure out of that 60%, probably 40% of that is going to be allocated within large cap growth. And depending on how you split that up, if you want to go value blend and growth, I would rather cut out the middle and just go, I know what I'm getting with a deep value strategy. I know what I'm getting with a QQQ and just split it in half and say 15 to 20%. 

Ric Edelman: Invesco and Nasdaq have been long partners, as typified by the Q’S, but you do much more than just offer QQQ. You've got, frankly, a broad innovation suite. Talk about the different investment options that go beyond just QQQ. 

Paul Schroeder: Yeah, thanks for bringing that up Ric. So, in October of 2020, we launched a few other funds to really hopefully gain a halo effect from the Q’S. And to be honest, I'm surprised it took us this long to do it. So first and foremost, I think which is most exciting. We launched a fund with a ticker QQQM, M as in Mary, which is also a Nasdaq 100 tracking ETF. Now, Paul, why would Invesco launch another ETF that tracks the exact same index as a fund that already exists? Well, what a lot of people don't realize, which I'm sure a lot of your audience realizes, though, if they use ETFs quite a bit, is that many of the ETFs launched in the 1990s were structured as unit trusts, and QQQ is no exception to that. But to make changes to a unit trust like that can be a little bit cumbersome. So, we spoke with Nasdaq and they had no issue. We launched QQMQ tracking the Nasdaq 100 and this more updated ETF package. So, what does that ultimately mean for a financial advisor who buys this. Well we wanted to lower the expense ratio. You know, over the past 5-10 years if we learned anything, it's a race to zero when it comes to fees, not only on our end, but commissions across the board, within the financial industry, the lower the better, right? Which obviously benefits the end investor. 

Paul Schroeder: So, we dropped the expense ratio to access the Nasdaq 100 by five basis points. So, it's at 15 basis points on the expense ratio versus 20 of the Q’S. But there are also minor details that should help QQQM track the Nasdaq 100 tighter as time passes. So, it's able to reinvest the dividends received by the underlying constituents back into the index, whereas QQQ  has to hold that in cash. It's also able to participate in securities lending, which generates a few extra basis points. You know, over a given period of time of revenue for the fund and is passed on to the investor as well. So, what we've seen since inception, which obviously includes the drawdown of 2022, the run up throughout 2023, is that QQQM has tracked the Nasdaq 100 tighter than QQQ and has outperformed as well, too. You know, you would expect QQQ to outperform slightly. We're talking very few basis points during large drawdowns because of the cash component there, the dividend sitting in cash. But during up years you would expect QQQM to outperform because there really isn't any cash sitting in the fund. 

Paul Schroeder: And we really saw that play out. So, we really launched it with the buy and hold long time investor in mind. You know, institutions are going to continue to use Q’s because the liquidity that's there, the ecosystem that's there, the option market that is embedded within the Q’s, it has the second most actively traded derivatives market behind STY when it comes to ETFs. So, I think we just wanted to make sure that we were aligning ourselves as we've been trying and have for decades now with the individual investor to make sure that we have their best interests in mind. The second fund we really launched, though was QQQJ as in John, and this is going to fall within your mid-cap growth bucket and continues on that methodology of the Nasdaq 100 to the next 100 stocks. So, if QQQ and QQQM are stock one through 100, QQQJ is going to be stock number 101 through 200. Essentially, like a lot of other mid-cap strategies, you're trying to capture some of these strategies earlier within their growth cycle. And what we've seen unfortunately, is that mid-cap growth has been an unloved area of the market since 2020 as there's been, you know, really a primary focus on Mega-cap growth. 

Paul Schroeder: But it's an area that I think, as advisors look to diversify out. We look as at QQQJ as a large cap growth diversifier moving down in the cap market spectrum, but not necessarily having to go all the way down to small cap. The third fund that we launched was in 2021, which was QQQS.  And QQQS is a slightly different flavor, really focused on innovation, where it's looking at all the companies listed on Nasdaq X, QQQ, QQQJ funds, and it's looking at their patent values and doing a calculation of patent value over market cap to invest in these smaller companies, to really target companies that are being rather innovative. And what we've seen from that fund is that you get a very interesting healthcare exposure. As you mentioned, Ric, you get a lot of these technologically focused funds or companies that have listed on Nasdaq. And healthcare is actually a big area that has focused and listed on Nasdaq. Healthcare is an up and coming sector within the Nasdaq 100. It's a good chunk within the next 200, the next gen 200 and is the largest, one of the largest sectors within QQQS.  So really it's a way that we're trying to offer innovative companies across the cap market spectrum to investors. 

Ric Edelman: How much overlap is there among these three ETFs is there? I mean, clearly there's not going to be any overlap between QQQM and QQQJ. One of them is the top 100, the other one is the next 100. What about S. Is there any overlap funds that are inside S that will also be in M or J. 

Paul Schroeder: No. So, the overlap is zero as well. All three of these funds have the same rebalance schedule where they're reconstituting the third Friday of December. And within QQQS’s index's methodology, it excludes Nasdaq 100 and Nasdaq Next Gen from being selected within the strategy. 

Ric Edelman: So it would strike me that these three - first of all, any other initials you want to mention m j s?   

Paul Schroeder: That that that's basically it. Thank you, Ric..   (laughter) 

Ric Edelman: So with all three of these, it would seem to me that it's pretty easy for investors to modernize their portfolios. 

Paul Schroeder: I would agree with you 100%. You know, as I've mentioned before, as as you elaborated on as well, Nasdaq has done a fantastic job of attracting new, innovative, technologically focused companies to list on their exchange. They've been a fantastic partner of Invesco now for 25 years through QQQ, and they have my full faith that they'll continue to attract these great new companies to list on their exchange. You know, the most recent one that I think that grabbed the most headlines was ARM Holdings, you know, which launched back in December. Unfortunately, it didn't necessarily meet the seasoning requirements that these indexes have to be included in. But, you know, I think that's another great example of a company that has decided to list on Nasdaq because they have the pedigree of having these companies list on their exchange.  Really part of their pitch Ric that they do when they're talking and trying to get companies to list, they ask a very simplistic question of what do you see your company being when you grow up? I mean, do you see your company being a JP Morgan or a Berkshire or something like that?   Which they're great companies, slightly different. Or do you see yourself being an Apple, you know, an Amazon when when you grow up. And obviously there's a pedigree to that when you're talking a lot of these young, technologically focused companies, they have really aspired to be leaders within their industry like those companies I mentioned. 

Ric Edelman: So, I encourage you to take a look, as we celebrate Invesco QQQ's 25th anniversary, I invite you to take a look in these links: QQQM, QQQJ, QQQS and QQQ so you can take a deeper dive on your own. This has been a fascinating conversation. Congratulations on achieving your 25th anniversary, Paul. This is certainly very exciting news at Invesco all year long. That's Paul Schroder. He is the equity product strategist for the Q’S at Invesco. Paul, thanks for being with us on the show. 

Paul Schroeder: Thank you very much Ric. Always a pleasure. 

Ric Edelman: On Monday's show houses are getting small real small. How we're solving the housing affordability crisis in a new and unusual way. 

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