Invesco has unveiled an equal-weight Nasdaq 100 ETF within days of the index provider undergoing a “special rebalance” to avoid over-concentration in the ‘magnificent seven’ tech giants.
The Invesco Nasdaq-100 Equal Weight UCITS ETF (IEWQ) is listed on the London Stock Exchange, Deutsche Boerse and SIX Swiss Exchange with a total expense ratio (TER) of 0.20%.
IEWQ tracks the Nasdaq-100 Equal Weighted index of the 100 largest companies on the Nasdaq stock market, excluding financials.
The ETF equal weights each constituent at each quarterly rebalancing. This means its top 10 holdings constitute 10% of its total weighting versus 60% in the parent index at present.
The weight of the technology sector is also reduced to little over 50% to 35% of the equal weight benchmark.
Chris Mellor, head of EMEA equity ETF product management at Invesco, said: “Nasdaq was once seen as primarily a technology index and of course much of its success has been driven by tech giants.
“However, it is also home to companies in other sectors, including those traditionally viewed as more defensive. Innovation is the thread stitching all these Nasdaq-listed companies together, whether in terms of the industry in which the company is operating or the dynamism of its management.
“This equal-weighted ETF spreads exposure evenly across all these opportunities.”
Invesco’s new launch follows Nasdaq’s announcement that it will conduct a special rebalance on its headline index on 24 July.
The Nasdaq 100 has shot up 31.8% since the start of the year, as at 11 July, its seven largest constituents adding $3.6trn in market cap.
Nasdaq is able to perform a special rebalance if the largest stock in the index exceeds 23% or the collective weight of securities with individual weights over 4.5% exceed 48% when combined.
IEQW joins the Amundi US Tech 100 Equal Weight UCITS ETF (WEBB) in offering equal weight exposure to the Nasdaq 100.