New Listing

Invesco unveils Nasdaq ‘next generation’ ETF

The ETF will be a mirror strategy of the US-listed $1.1bn Invesco Nasdaq Next Gen 100 ETF (QQQJ)

Tom Eckett


Invesco has expanded its tech ETF range with the launch of two strategies, a Nasdaq "next generation" 100 ETF and a synthetically-replicated Nasdaq 100 ETF, ETF Stream can reveal.

The Invesco NASDAQ Next Generation 100 UCITS ETF (EQJS) and the Invesco Nasdaq-100 Swap UCITS ETF (EQQS) are listed on the London Stock Exchange (LSE) with total expense ratios (TERs) of 0.25% and 0.20%, respectively.

EQJS tracks the Nasdaq Next Generation 100 index which offers exposure to the largest 100 or so non-financial companies outside of the Nasdaq 100.

The ETF will be a mirror strategy of the US-listed Invesco Nasdaq Next Gen 100 ETF (QQQJ) which has gathered $1.1bn assets under management (AUM) since launch in October 2020.

The index currently has a heavy weighting to technology (33%) while health care (22%), communication services (22.7%) and industrials (11.8%) are also high weights.

Commenting on the launch, Chris Mellor, head of EMEA equity and commodity ETF product management, said: “One of the biggest growth drivers of Nasdaq-listed companies tends to be their level of spending on research and development.

"By reinvesting a significant amount of their current cashflow back into the company to fund new ideas, they have shown the ability to grow revenues and earnings faster than companies that spend less.

"Plus, this is not just about technology companies. The next generation segment also provides significant exposure to leading-edge innovators in health care, communications, industrials and several other sectors.”

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Meanwhile, EQQS tracks the Nasdaq 100 which offers exposure to the largest US-listed tech companies.

Invesco already offers a physically replicated version of EQQS, the firm’s flagship $5.1bn Invesco EQQQ Nasdaq 100 UCITS ETF (EQQQ).

The reason for launching EQQS is synthetic ETFs do not pay withholding tax on dividends for US stocks as the substitute basket of the ETF is restricted to non-dividend paying securities.

Meanwhile, physical ETFs domiciled in Luxembourg pay 30% withholding tax on US equity dividends while Irish-domiciled ETFs pay 15% leading to outperformance in synthetic ETFs, all else being equal.

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