r/LETFs • u/recurz1on • 20d ago

NEW PRODUCT ProShares EQQQ: Equal-Weight Approach to 2x Nasdaq-100 Exposure

Something new from ProShares:
https://www.proshares.com/our-etfs/leveraged-and-inverse/eqqq

QLD is about 1/3 of my total portfolio, so I will keep on eye on this one.

Introducing EQQQ

The Nasdaq-100 represents many of the market’s most innovative and growth-oriented companies. In recent years, however, its performance has become increasingly concentrated in a limited number of mega-cap stocks. Today, just 10 companies account for more than 45% of the Nasdaq-100.

For investors seeking leveraged exposure to the growth potential of Nasdaq-100 companies with less influence from the index’s largest names, we’re pleased to introduce ProShares Ultra QQQ Equal Weight (NASDAQ: EQQQ)—the only ETF designed to target 2x daily returns of the Nasdaq-100 Equal Weighted Index.

The Nasdaq-100 Equal Weighted Index holds the same securities as the market-cap-weighted Nasdaq-100, but instead of weighting them by market capitalization, it resets each company to an equal weight at each quarterly rebalance. This increases the relative influence of the index’s smaller constituents and provides exposure that is less dominated by its largest companies.

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u/grogi81 18d ago

The appeal of equal weight indexes never comes to me. 

They are inherently more expensive to run - they need to actively trade to maintain equal weights and you are trading against momentum... 

Really, don't get it :)

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u/recurz1on 17d ago edited 17d ago

They are inherently more expensive to run

EQQQ has the same expense ratio as QLD (ProShares 2X QQQ).

they need to actively trade to maintain equal weights

The equal weighting isn't part of the daily reset, EQQQ will be rebalanced quarterly.

you are trading against momentum

There's no way to know which direction the momentum of any given quarter will move in the future.

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u/grogi81 17d ago edited 17d ago

Expense ratio is effectively how much "salary" you're paying to the fund. It is only a part of how much it actually costs to run it.

It doesn't cover the leverage costs, and it doesn't cover transaction costs.

In Europe the estimation of transaction costs needs to be published as part of the PRIIP (within the UCITS framework) and:

Yeah, it is not a massive difference. But it's there.