QQQJ: Nasdaq's Next Generation Stocks Disappoint

Summary

• QQQJ tracks the "Next Generation" of Nasdaq stocks, or the 101-200 largest non-financial stocks listed on the Nasdaq. QQQJ's expense ratio is 0.15%, and it has $675 million in assets.
• Seeking to piggyback off the success of QQQ, QQQJ has disappointed since its October 2020 launch. Over the last three years, it's been the second-worst-performing mid-cap ETF on the market.
• QQQJ still trades at an expensive 26.26x forward earnings, one of the highest in its category, and offers less earnings growth than large-cap stocks.
• Instead, investors might find factor ETFs more appropriate. The results of 69 mid-cap funds are presented below, and it's evident quality- and value-oriented strategies are superior.
• Given the large number of alternatives, relatively weak fundamentals, and disappointing returns, I rate QQQJ  as a "sell".

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Investment Thesis

This article explains why I recommend investors avoid the Invesco Nasdaq Next Gen 100 ETF (NASDAQ:QQQJ). Since February 2021, QQQJ has been the second-worst-performing mid-cap fund and still trades at 26.26x forward earnings, making it one of

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.