First Trust Nasdaq-100 Select Equal Weight ETF (QQEW)

The First Trust Nasdaq-100 Select Equal Weight ETF (ticker QQEW) owns all 100 of the largest Nasdaq stocks. But here is the twist: every stock gets the same weight. A normal Nasdaq fund gives the biggest companies the biggest slices. Apple gets a much bigger piece than the 80th-largest Nasdaq company. Not in QQEW. Each stock is exactly 1 percent of the fund. When a stock shoots up in value and becomes more than 1 percent, the fund sells some. When a stock falls and drops below 1 percent, the fund buys more. Every quarter, the fund rebalances everything back to 1 percent each. The result: you own the Nasdaq-100, but the smaller companies inside it get much more of your money than they would in a traditional fund.

QQEW — the basics


What it holds	Nasdaq-100 stocks, equal-weighted
Number of stocks	100
Weight per stock	1 percent each (before rebalancing)
Rebalancing	Quarterly
Sponsor	First Trust
Expense ratio	Low-to-moderate; typically 0.20–0.35%
Trading	NASDAQ; liquid, tight spreads
Good for	Investors who want to own tech without mega-cap dominance

Why concentration in tech matters

The Nasdaq is not a diverse index. It is mostly technology, communications, and consumer companies. But within that list, a few names are absolutely huge. Right now, the five biggest stocks make up roughly 40 percent of a normal cap-weighted Nasdaq-100 fund. The top ten make up about half.

If you buy a regular Nasdaq-100 fund, you are making a bet on the biggest companies. You might not think about it that way, but that is what the math does. You get huge exposure to only a handful of names. The other 90 companies matter much less to your returns.

Equal weight flips this. When the five biggest companies are 40 percent in a traditional fund, they are only 5 percent in QQEW. The 50th, 75th, and 100th largest companies get the same 1 percent as the biggest. This sounds extreme, but it is just a different definition of balance.

When equal weight wins and loses

Equal weight does better when the smaller companies in the group outperform the big ones. It does worse when the biggest companies — which became big because they won in the market — keep winning.

From 2010 to 2020, the biggest tech companies destroyed smaller competitors. In that period, a regular cap-weighted fund beat QQEW by a lot. From 2020 to 2022, when some mega-cap names stumbled, QQEW held up better. The choice between the two is essentially a bet on whether you think the giant tech companies will keep dominating or whether smaller names will catch up.

There is also a hidden cost. Equal weight needs frequent rebalancing. Every three months, the fund buys and sells to push everything back to 1 percent each. All that trading has a cost — called rebalancing drag. It is small but adds up over years. The prospectus or fact sheet shows the actual number.

Small-cap style and value tilt

Because QQEW puts more money into smaller companies within the Nasdaq, it acts like it has a “small-cap style.” Smaller stocks are more volatile. They often have lower valuations. This gives QQEW a tilt toward what people call “value” investing — more focus on cheaper stocks than on pure growth.

The Nasdaq-100 is still mostly technology and communications. QQEW does not change that. But QQEW owns more of the smaller tech and communications companies and less of the absolute giants. That shift matters over time.

The rebalancing rhythm

First Trust rebalances on a set schedule, four times a year. On rebalancing day, the fund buys stocks that have fallen and sells stocks that have risen — buying low and selling high by force. This is actually good discipline: it stops you from getting too attached to winners.

But rebalancing also costs money. There are trading costs and fees. In a taxable account, rebalancing can create taxable gains. An investor needs to understand and accept this cost.

A straightforward choice

Looking at QQEW versus a regular Nasdaq-100 fund really comes down to one question: do you think the biggest tech companies will keep crushing it, or do you think the next tier down will start catching up?

If you think big will stay big, a cap-weighted fund is the right call. If you think smaller names have a shot, QQEW makes sense. If you are unsure, QQEW at least protects you from being wrong by accident — you will not accidentally bet 40 percent of your money on five companies.

The fund is transparent. You can see the holdings. You can compare returns to a standard Nasdaq fund over whatever time period matters to you. The cost is low. The idea is simple: equal weight instead of size weight. That is the whole difference.