Invesco NASDAQ 100 ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as People offset by weaker spots such as Process. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy merits a Below Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Broadcom

Alphabet

Tesla

Costco

Many use this fund as shorthand for tech exposure, but it stashed only 49% its portfolio in tech stocks as of April 2023. Still, that allocation exceeded the Russell 1000 Growth Index's by 7 percentage points and has been even wider in recent years. The fund’s 16.5% stake in the communications sector, which hosts internet powerhouses like Alphabet GOOG and Meta Platforms META, outweighed the category benchmark by about 9 percentage points. Lighter stakes in financials, healthcare, and industrial stocks funded those outsize sector positions. The fund’s sector bets have worked wonders in the past but can translate into volatile category benchmark-relative performance.

The companies that shape the bulk of this portfolio receive lofty valuations that reflect their promise. They tend to prioritize growth by reinvesting most of their profits into research and development. So, while this is not a growth fund by design, the portfolio backs into a growth tilt that mirrors the Russell 1000 Growth Index. 

A 100-stock portfolio and market-cap weighting make this a large-minded, top-heavy portfolio. Its average holding was nearly 50% larger than the Russell 1000 Growth Index’s from May 2018 through April 2023. And over that span, the 10 largest holdings constituted 49%-59% of the portfolio. Piling into the market’s hardest hitters has paid off over the past 15 years, but broad diversification is more attractive in the long run.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point) Morningstar maps the covered vehicle’s Process Pillar to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning Process Pillar ratings to vehicles that follow the same strategy.

Below Average

Process

Invesco’s equity index management team oversees this fund, with Peter Hubbard, Michael Jeanette, Tony Seisser, and Pratik Doshi as the named managers. The team boasts a wealth of experience and strong supporting infrastructure, including analysts, traders, and technology platforms. It earns an Above Average People rating.

Hubbard heads up the index portfolio management team. He has been with Invesco since 2005 and a portfolio manager since 2007. Jeanette leads the equity index team under Hubbard and has been a portfolio manager at Invesco since 2008. Seisser and Doshi joined the team in 2013 and 2018, respectively. These leaders oversee a broader team of experienced portfolio managers who assist with the portfolio’s day-to-day operations.

The team draws on a solid pool of resources from Invesco. Much of the workflow is automated, courtesy of the firm’s proprietary portfolio-management dashboard. A team of analysts assists with corporate actions and advises the team on necessary steps to anticipate upcoming index changes. Trade execution is handed to Invesco’s global trading desk, allowing the managers to focus on mitigating tracking error and tax efficiency. The team is subject to independent risk oversight.

Note: The People Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point), Morningstar maps the covered vehicle’s People Pillar ratings to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning People Pillar ratings to vehicles that follow the same strategy.

Above Average

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Average

Parent

Invesco Nasdaq 100 ETF

QQQM is passively managed to track a modified-market-cap weighted narrow index of 100 NASDAQ-listed stocks, excluding financials.

Invesco QQQ

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