Launched on 09/25/2003, the Fidelity Nasdaq Composite Index ETF (ONEQ) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Fidelity. It has amassed assets over $4.07 billion, making it one of the larger ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.21%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.74%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 48.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 12.33% of total assets, followed by Microsoft Corp (MSFT) and Amazon.com Inc (AMZN).
The top 10 holdings account for about 51.84% of total assets under management.
Performance and Risk
ONEQ seeks to match the performance of the NASDAQ Composite Index before fees and expenses. The NASDAQ Composite TR USD is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange.
The ETF has lost about -21.31% so far this year and is down about -14.67% in the last one year (as of 08/03/2022). In the past 52-week period, it has traded between $41.77 and $62.46.
The ETF has a beta of 1.13 and standard deviation of 27.40% for the trailing three-year period, making it a medium risk choice in the space. With about 1015 holdings, it effectively diversifies company-specific risk.
Fidelity Nasdaq Composite Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, ONEQ is a sufficient option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $74.73 billion in assets, Invesco QQQ has $173.71 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Fidelity Nasdaq Composite Index ETF (ONEQ): ETF Research Reports
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
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Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
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