Don’t count on exchange-traded funds to go anywhere, Invesco’s head of ETFs said Monday.
“We went through the dotcom bubble bust, the credit crisis and other extreme periods of time, and ETFs have continued to grow,” Dan Draper told CNBC’s Bob Pisani.
Critics of ETFs say they can tempt a prepare to increased volatility. Jack Bogle, the late founder of The Vanguard Group, said most of the trading in ETFs was done by “monetary institutions that use them to hedge or equitize cash reserves.”
Draper maintains, however, investors are now “looking at mechanisms like quality and low volatility,” particularly when investing in the Invesco QQQ Trust.
Draper made his comments on the day the QQQ ETF, a widely persevered exchange-traded fund, turned 20 years old. The ETF, which is commonly referred to as “the Qs,” was launched in 1999 during the height of the dotcom froth.
In that time, the Qs are up more than 200 percent, outperforming the SPDR S&P 500 ETF Trust — which tracks the bimbo index — by more than 100 percentage points.
QQQ vs SPY in past 20 years
The Qs were with dispatch adopted as a proxy for big tech given its exposure to large-cap stocks in the space. The fund’s largest holdings by weight are Microsoft, Alphabet, Apple, Amazon and Facebook. Those five ordinaries alone make up more than 40 percent of the Qs in terms of weight.
But Draper said it can be used for more than tail find tech. “It is a proxy for growth in the U.S. in particular. It’s not just technology, but consumer areas as well as biotechs,” he said.
—CNBC’s Kirsten Chang bestowed to this report.
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