QQQ Dominates Tech ETFs With Over $100 Billion In AUM

Over the last month, it has been made clear that technology is a great place to hide out in the coronavirus recession. There have been massive overall inflows into the sector ETFs, especially for the tech-heavy Nasdaq Index. Not surprising, given that the Nasdaq Composite total return is almost 5% higher year-to-date, even with the worst economic numbers since the Great Depression. With the trend of working from home largely intact, and technology being used to replace in-person meetings with friends and family, this trend is likely to continue for the foreseeable future. Below we look at the top inflows for tech-based ETFs over the last month.

As mentioned, the top performer in the last month is the Invesco QQQ Trust
(QQQ). This ETF has seen inflows of a massive $3.59 billion in that period, and an even more impressive $9.85 billion in the last 90 days. This is the clear winner based on assets gained, but it does have the unfair advantage of being the largest in AUM as a starting point, with almost $108 billion total.

The next two biggest inflows over the last month were the Vanguard Information Technology ETF (VGT) and the Technology Select Sector SPDR Fund (XLK), which had inflows of $1.24 billion and $754 million, respectively. As a percentage of assets, though, this was more impressive than the Invesco assets, as the ETFs have only $29 billion each in AUM total. Their net expense ratios of 0.1% and 0.13% are the most competitive among the tech asset class, likely explaining some of the inflows.

Rounding out the top 5 in monthly asset flows for tech were the iShares North American Tech-Software ETF (IGV) and the iShares PHLX Semiconductor ETF (SOXX), as investors looked to increase their exposure to specific industries as opposed to the overall technology sector. They had inflows of $278 million and $162 million in the last month, respectively. These ETFs carry a net expense ratio that is a bit higher, at 0.48% each.

Fidelity MSCI
Information Technology Index ETF (FTEC), Global X Nasdaq 100 Covered Call ETF (QYLD), and the First Trust NASDAQ Technology Dividend Index Fund (TDIV) also had significant inflows over the last month, gaining $101 million, $47.4 million, and $28.7 million.

Some of the tech outflows over the last month belonged to leveraged products, as investors looked to take their well-timed bets off the table after a strong run. The Direxion Daily Semiconductors Bull 3x Shares (SOXL) and the ProShares UltraPro QQQ (TQQQ) had two of the largest outflows over the last month, with -$48.9 million and a whopping -$317.8 million leaving. Given the 3x leverage, and the fact it only seeks to emulate leveraged daily returns, its not a surprise to see funds taken off the table. There are massive costs in resetting the leverage tools every day that the investor bears, and the net expense ratios of 1.02% and 0.95% are much higher than non-leveraged products.

Finally, another major outflow ETF was the VanEck Vectors Semiconductor ETF (SMH), as -$174.8 million was lost in the last month from the holding. This is likely some profit taking after the ETF has gained over 32% since the March 23 lows.

It will be interesting to see if the flows can continue in the tech space over the next few months, especially after such an impressive run. The total inflows to the sector were over $5.6 billion overall, despite some profit taking and movements out of several ETFs.

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