Stock-picking is a difficult endeavor. But there are plenty of examples of active fund managers identifying winners. Ordinary investors can follow those winning moves. They opt for ETFs to gain broad-based exposure to multiple stocks widely embraced by active managers.
Two funds that make a lot of sense for retail investors looking to track the pros are the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ). Both ETFs have the same lineups. For long-term investors who want basket exposure to stocks currently favored by active managers, QQQM could be optimal. That’s because its annual fee of 0.15% is five basis points below that of QQQ’s yearly expense ratio.
QQQ and QQQM are solid ideas for investors looking to mirror activity among active fund managers. That’s because data suggests those professional market participants are currently fond of several stocks residing in the Invesco ETFs.
Fund Managers Love Some Familiar QQQ Holdings
Morningstar’s Susan Dziubinski recently examined the 10 stocks that the highest-rated active equity fund managers have been gobbling up. That list includes several QQQ/QQQM components, led by Elon Musk’s Tesla (TSLA). The electric vehicle giant is the second-largest consumer discretionary in QQQ and QQQM.
“The company announced a strategic shift in January. [That signals] lower growth expectations for 2024 and an emphasis on reductions and development of its new affordable sport utility vehicle instead. Yet Morningstar continues to forecast margin expansion over the long term as Tesla begins to sell its affordable vehicles and benefits from cost-reduction initiatives,” noted Dziubinski.
One stock held by QQQ and QQQM that’s being snatched up by the highest-rated fund managers is Charter Communications (CHTR). That’s one of 12 communication services names held by the ETFs. It’s also the stock most undervalued on the Morningstar list.
“We also expect dense fixed-line networks like Charter’s could play an increasingly important role in powering wireless networks in the future. While we don’t like heavy discounting to drive growth, Charter has amassed nearly 8 million wireless customers, primarily relying on Verizon’s network,” noted Morningstar analyst Mike Hodel.
The other QQQ/QQQM holdings that are being widely embraced by active fund managers are Broadcom (AVGO) and Starbucks (SBUX), which combine for about 6% of the fund’s portfolios. Broadcom is one of the best-performing QQQ/QQQM components this year. That’s due in large part to its leverage to the artificial intelligence (AI) theme.
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