Many retail investors love to examine the favorite holdings of active fund managers and buy some of those stocks for themselves. That’s not a terrible strategy, but obviously the outcomes hinge on how good the active manager is. It’s that simple.
There’s also the capital crunch consideration. Many investors may not have the cash on hand to buy several of a fund manager’s top holdings. Passive ETFs like the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ) ease that burden. In fact, and perhaps not surprisingly, those funds are homes to an array of stocks that are beloved by active managers.
QQQ and QQQM, which have the same rosters, are homes to some stocks that active managers have recently been buying. Morningstar recently screened the universe of U.S. large-value, U.S. large-blend, or U.S. large-growth rated gold, silver, or bronze and with 50 or fewer holdings, turning out a list of 10 stocks active managers have recently purchased — a group including several QQQ/QQQM holdings.
Active Managers Like These QQQ Holdings
Not surprisingly, Apple (AAPL), the largest holding in QQQ and QQQM, is a name active managers have been gravitating to as of late. Although, the company could face headwinds via China and a sluggish smartphone upgrade cycle.
“iPhone revenue has grown at a 7% average annual rate in the past 10 years, but we believe through-cycle iPhone revenue growth is slowing and forecast 5% average annual growth through fiscal 2029. Core to our thesis are China headwinds and a mature smartphone market,” noted Morningstar’s William Kerwin.
Comcast (CMCSA) is another QQQ/QQQM component that active managers have been buying of late. Perhaps that’s in a bid to find some value after the cable giant delivered disappointing fourth-quarter results. Even when accounting for that glum report, Comcast fundamentals are appealing.
“Comcast generated $3.3 billion of free cash flow, taking the total for the year to $12.5 billion. Cash flow declined about $400 million versus 2023, but the firm also absorbed $2 billion in higher cash taxes largely related to the sale of Hulu,” observed Morningstar’s Mike Hodel.
Airbnb (ABNB) is another example of a QQQ/QQQM holding that active managers have recently been leaning into. And that comes after a solid fourth-quarter earnings report from the travel and leisure company.
“We continue to expect Airbnb’s network advantage, source of its narrow-moat rating, will strengthen during the next several years, driven by expansion in its core vacation rental international business and relaunch of experiences later this year,” said Morningstar’s Dan Wasiolek.
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