Quick Reading
XNTK’s quarterly equal-weight rebalancing outperformed QQQ by 23 percentage points last year and outpaced it by 272 points over the decade.
Equal weighting gives Broadcom and Palantir, whose shares are up 776% and 503% over five years, respectively, the same portfolio impact as NVIDIA within XNTK.
XNTK’s concentration in the cleantech space is falling both ways: it charges fees almost twice as much as QQQ and has fallen 42% in 2022 compared to QQQ’s 34% decline.
The lithium producer has surpassed a private valuation of $1 billion, joining the ranks of America’s most influential startups. You can now invest in EnergyX along with global giants like General Motors, but only until July 16th. (sponsor)
SPDR NYSE Technology ETF (NYSEARCA:XNTK) and Invesco QQQ Trust (NASDAQ:QQQ) look like two variations of the same deal. Both live near the AI rally site. Both charge institutional-level fees. However, XNTK’s return over the past year was 51.65% versus QQQ’s 28.43%, and 808.69% over ten years versus QQQ’s 536.62%. A portfolio of 35 equally weighted stocks strongly outperforms the Nasdaq-100. The reason matters more than the breakup.
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What each fund is actually betting on
QQQ tracks the Nasdaq-100 and lets market cap decide everything. As Apple grows, its weight grows. When NVIDIA melts, so does part of it. This mechanism is a bet on the continued dominance of mega-cap companies: the largest companies’ stocks continue to grow faster than the rest of the index. This also means that QQQ carries significant non-tech influence. Costco (NASDAQ:COST) is classified as a consumer protection rather than technology stock and is listed on QQQ alongside healthcare and staples names.
XNTK tracks the NYSE Technology Index, with about 35 U.S.-listed technology leaders equally weighted and rebalanced quarterly. This structure is two stacked bets. First, only clean technologies, without any problems from consumers or public health. Second, breadth over dominance. A mid-tier holding is as important as a top holding, and every rebalancing reduces the number of winners and increases the number of laggards. In an environment where AI leadership shifts between convenience foods, software and hyperscalers, this reset has affected more of the movement than weight control.
July 16 is the last day to take advantage of the lithium boom (sponsor)
General Motors, POSCO and more than 50,000 daily investors have already backed lithium producer EnergyX.
Here’s why you should do the same before the July 16 investment deadline: Lithium prices are up 75% this year, and demand is projected to increase a staggering 5-fold by 2040.
With technology that can recover 3 times more lithium than traditional methods, EnergyX is poised to unlock up to 15+ million tons. Become a private investor in EnergyX before the July 16th deadline.
The story continues
Where does the discrepancy appear?
AI beneficiaries prove this. NVIDIA (NASDAQ:NVDA) has a market capitalization of $5.1 trillion and is up 929% in five years. QQQ is, by design, largely his. XNTK has about the same weight as everything else and combines it with Broadcom (NASDAQ:AVGO), up 775.99% over five years, and Palantir (NASDAQ:PLTR), up 503.15%. Equal weighting gives these winners real impact on the portfolio.
Compromise manifests itself in stress. In 2022, XNTK stock fell 41.78%, while QQQ stock fell 33.71%. Concentrated technologies suffer more when rates rise. And individual names can still break XNTK: Microsoft Shares of (NASDAQ:MSFT) are down 21.69% over the past year, despite gains from most tech companies.
Practical comparison
QQQ costs less, distributes more revenue, and includes ballast from companies like Costco that are cushioning shocks in the cleantech industry. XNTK costs more, earns almost nothing, and provides a purer, more concentrated bet on technology with forced quarterly rebalancing.
Verdict
XNTK suits an investor who already believes technology will continue to lead, wants that thesis clearly stated, and can weather a deeper downturn like 2022 when technology breaks down. The equal weight dump is a real benefit: it monetizes rotation within technologies, rather than allowing one or two megacaps to dictate returns. QQQ is suitable for the investor who wants exposure to Nasdaq’s largest companies at low cost, with some non-tech diversification and better tax and return characteristics. If the lead shrinks back to just a few trillion-dollar names, QQQ’s top weight will start to win again. Until then, the XNTK framework does more work.
Meet America’s Newest $1 Billion Unicorn (Sponsor)
The US startup has just passed a private valuation of $1 billion, joining billion-dollar private companies such as OpenAI and ByteDance. Unlike other unicorns, you can invest in EnergyX right now; but only until July 16th.
More than 50,000 people have already done this, as well as such global giants as General Motors and POSCO.
That’s why there’s so much interest: EnergyX’s patented technology recovers 3 times more lithium than traditional methods. This is a big development as by 2040 demand for lithium is expected to be 5 times the current production level. Become an early-stage shareholder of EnergyX before the July 16 investment deadline.
Contact editorial@247wallst.com for any questions or corrections.