In short
Michael Batnick and Ben Carlson discuss why owning the Nasdaq 100 (via QQQ) has been a straightforward way to capture AI winners, citing Micron’s rapid rise: it jumped from outside the top 10 to the third-largest QQQ holding within about two months and contributed 5.2% of QQQ’s YTD gains (Micron up ~290% YTD as of late June 2026). They note AI exposure in QQQ without mentioning “Mag 7” names. They interview Paul Schroeder, Invesco director of Factor and QQQ equity product strategy, about Nasdaq 100 methodology and SpaceX’s inclusion.
Key claims
Nasdaq 100 requires listing on a stock exchange (and not being a financial); weighting uses “modified market cap” based on free float (with a 3x multiplier when free float is <1/3 of total market cap). SpaceX’s estimated weight is 1.2%–1.4% after July 7 close. They also discuss QQQ’s core-portfolio role, turnover (6%–8% annually), and why Meta’s weight can be lower than Micron’s despite higher market cap (earnings, CapEx/free cash flow concerns).
Notable examples
Micron, AMD, Intel, Applied Materials, Lamb Research, SanDisk, and SpaceX.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VODiscussing NASDAQ 100 and Micron's Rise
0:45 to 2:58
Exploration of Micron's rapid ascent in the NASDAQ 100 and market dynamics.
“Michael, you always give me flack about my Grand Rapids hedging capabilities.”
Introduction to Paul Schroeder
2:58 to 3:43
Introduction of guest Paul Schroeder and discussion about index methodology.
“And to your point, not once, I don't think, did we mention a Mag 7 name, literally.”
NASDAQ 100 Inclusion Criteria
3:43 to 5:05
Understanding the criteria for stocks to be included in the NASDAQ 100.
“Here is our conversation with Paul Schroeder from Invesco.”
Potential for Non-Tech Companies
5:05 to 7:23
Discussion on whether non-tech companies could be included in the NASDAQ 100.
“of function where they're looking also and taking into account free float as more of a weight determiner, especially for some of these companies that do have a lower free float.”
Core Portfolio Considerations
7:23 to 9:16
Examining the shift from S&P 500 to NASDAQ 100 as a core portfolio holding.
“And I was going to let you speak, but this is very timely.”
Interest in SpaceX IPO and Index Inclusion
9:16 to 11:04
Analyzing the buzz around SpaceX's IPO and its potential NASDAQ 100 inclusion.
“Are you surprised at the degree to which people have seemingly cared about index inclusion rules in the past month or so?”
Flexibility of the NASDAQ 100 Committee
11:04 to 14:00
Exploring the flexibility and transparency of the NASDAQ 100 index committee.
“I think it would be weird if a multi-trillion dollar market cap company was not in the index.”
Flexibility in Indexing Process
14:00 to 15:00
Learn about the flexibility and transparency of the NASDAQ 100 indexing process.
“you follow and you have to follow the rules.”
Private Markets vs. Public Markets
15:00 to 16:00
Understand the dynamics of investing in private markets compared to public markets.
“We've also heard the exact opposite where I don't want to invest in these newly IPOs because they're not profitable.”
Performance Drivers of NASDAQ 100
16:00 to 18:30
Explore the reasons behind the NASDAQ 100's consistent outperformance compared to other indexes.
“I mean, if we rewind the clock 25 years ago, traditional path company goes public.”
Show all 14 chapters
Innovation and Long-Term Success
18:30 to 20:40
Discover how innovation drives the long-term success of companies in the NASDAQ 100.
“But I think when you look at it from a longer term basis, what you generally tend to see are more innovative and technologically focused companies list on the NASDAQ stock exchange.”
Concerns About Market Cycles
20:40 to 22:20
Delve into the concerns about cyclical performance and market trends for NASDAQ companies.
“Is there any part of you, and I'm asking you to put your analyst hat on here, that's concerned that the performance has been so strong in the NASDAQ that going on, you know, 15, 20 years of high double digit performance.”
Market Cap and Weighting in Indices
22:20 to 24:30
Learn how weighting methodologies affect market cap representation in indices like NASDAQ 100.
“Number six, seven, eight, nine, 10, 11, 12.”
Interest in Next-Gen ETFs
24:30 to 28:00
Examine the growing interest in next-generation ETFs and their implications in the market.
“Well, another example of this is not to belabor the point, but Walmart is the same size as applied materials.”
Transcript
Automatic transcript. May contain errors.0:00Ben Carlson:Today's Animal Spirits Talk Your Book is brought to you by Invesco. Go to Invesco.com to learn more about the NASDAQ 100 ETF QQQ and their whole other innovation suite of ETFs. Invesco.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.
0:34Ben Carlson:Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.
0:42Ben Carlson:Welcome to Animal Spirits with Michael and Ben. Michael, you always give me flack about my Grand Rapids hedging capabilities. I think it's a gift. You think it's a crutch sometimes. Someone asked us, I don't know, two years ago, what's the best way to invest in AI? And I said, my Grand Rapids hedge is just own the NASDAQ 100. I think that's the easiest way you're going to get the winners. The winners will rise to the top. Listen to this stat. We talked about Micron a little bit and how it's now the third largest company in the QQQ ETF, right? Pretty crazy. It's over a 5 % position. As of April, 2026, and we're recording this on June 29th, 2026.
1:20Ben Carlson:In April of 2026, YCharts has the ability to look back at the holdings over different months and different time periods. Micron was not in the top 10 of the Qs in April, two months ago. Today, it's the third largest holding. That happened really, really fast, right? And that's what I meant by the cream rises to the top. The winners will sort themselves out. It's not like this was a three-year thing. This was a three-month thing. Wow. Of going from outside the top 10 to the third largest holding in the index.
1:51Michael Batnick:I'll do you one better. Or not to one-up you, I will do you one equal, Ben. Micron year-to-date is up 290%. It is added alone 5.2 % to the year-to-date performance for the NASDAQ 100. If you own the Qs, 5.2 % of your year-to-date gain is from Micron. Another 2.8 % is from AMD. And this is in order. 2.5 % is from Intel, 1.7 % from Applied Materials, and 1.5 % each from Lamb Research and SanDisk. And all right, so let me do some math, Ben.
2:27Ben Carlson:Not exactly the household names that you'd expect.
2:30Michael Batnick:But that's the AI trade. So the top, and then it's Lamb Research and SanDisk and KLA Corp and Marvell and Cisco and Western Dig. These are all AI. So Ben, take a bath, sir. You nailed it.
2:43Ben Carlson:But we didn't talk about Google or Meta. or Microsoft or even NVIDIA in there.
2:49Michael Batnick:That's pretty wild when you think about it. You know what? How the changes have timed, Ben. We went 30 minutes talking about the Qs. And to your point, not once, I don't think, did we mention a Mag 7 name, literally. No, no, no. I just said, how come Micron is so much bigger than Meta? Yeah, which is, you're right.
3:09Ben Carlson:Micron is now, has twice the size in the index as Meta. Pretty crazy. We've talked to Paul Schroeder before. Paul is the director of Factor and QQQ equity product strategy. And of course, we talked about the biggest topic everyone's been talking about in recent months, SpaceX IPO. When will it be included in the index? How does the NASDAQ 100 methodology work? Michael, I feel like you've been very schooled on this. This has been something that you've poured your heart and soul into. Which part? Index methodology.
3:35Michael Batnick:Oh, well, we were getting questions.
3:37Ben Carlson:Yes. So we go into the whole thing, how the NASDAQ 100 works, how they make these decisions, how big of a position SpaceX will be. All that and more. Here is our conversation with Paul Schroeder from Invesco.
3:52Paul Schroeder:Paul, welcome back. Hey, thanks for having me, Michael. Good to be here.
3:55Michael Batnick:All right, we'll start with a question that I should know the answer to. In fact, I do know the answer to this. But for the audience who doesn't, for stocks to get into the NASDAQ 100, do they need to be listed on the NASDAQ exchange?
4:09Paul Schroeder:That's correct. That's the only real hard and fast requirement to be included within the NASDAQ 100. is that you need to be listed on a stock exchange, but also not be a financial.
4:21Michael Batnick:Okay. All right. I'm starting with the hard-hitting questions. Question number two, this is an index that has been thought of as a tech forward, innovation-based. I'm sure there are tons of companies that want to be included in the NASDAQ 100 for reasons that are very obvious. It's got the brand recognition and the cachet. And then of course, there's the fun flows, which don't hurt. Is it simply the top market cap companies or is there more to it than that?
4:48Paul Schroeder:There is a little bit more to that. With the rule changes that occurred, it used to be just the straight market cap weighted index with certain rules in place to keep it compliant with registered investment company concentration rules. But they essentially switched to a lesser of function where they're looking also and taking into account free float as more of a weight determiner, especially for some of these companies that do have a lower free float. So it did get a little bit more complex, but at the end of the day, the largest companies are still getting the largest weights.
5:23Michael Batnick:How do you make sure that the integrity of the intent of the NASDAQ technology is maintained? So what if, for example, the most boring company in the world wants to go from, I don't know, the New York Stock Exchange over the NASDAQ and you say, hey, wait a minute, get out of here. Walmart, no offense. Actually, you know what? Walmart is pretty innovative. Whatever. Clorox, a stodgy consumer staples company. What if they want to come? Would you welcome the business? How would that work? Yeah.
5:55Paul Schroeder:So you're exactly right. With the methodology of the NASDAQ 100 being as simplistic as it is, a company like you mentioned, Walmart, moving in in January because they switched listings if Clorox wanted to switch. Name any of these consumer-stable companies that I think a lot of people wouldn't necessarily associate with the tech-heavy NASDAQ 100. They would be included if their market cap included them, if it was high enough. With all that being said, though, I would welcome it. Even though NASDAQ 100 has been pretty tech heavy, 50 to 60%, depending on which classification system you're looking at, it's outperformed the tech sector, which I think is most interesting, while having 40 % less of that exposure.
6:42Paul Schroeder:But I think overall, what NASDAQ is really striving to do is to have the NASDAQ 100 be not just a large cap growth benchmark, but just a large cap in general for the U.S. market. So I think listing on NASDAQ has shown to do very well for your company if you do that overall. You also see NASDAQ winning the IPO race through the years and obviously getting notable changes like Walmart to their exchange overall. So I would welcome those sort of companies to come in because I'm very confident in the companies that are already there with providing that tech innovation weight overall.
7:23Michael Batnick:Ben, I'm sorry. I've got just one more. And I was going to let you speak, but this is very timely. We got an email from a listener. And it said, the subject line was core portfolio change. And it said, hey, guys, most people probably use the S &P 500 as their core piece of their portfolio. The investing world is always changing. Dow Jones, S &P, now we have the NASIC 100. I've always done 60 % to 70 % S &P as my core. Then I have my randoms. Looking back at the last 20 years since tech has taken over the world, the NASDAQ 100 has outperformed by 4 % to 5 % over 20 years. The NASDAQ 100 is more concentrated, of course.
8:01Michael Batnick:Is it time to split our core portfolio to 50-50 NASDAQ 100 to S &P? And the truth is, Paul, I didn't respond to this person. Even though we are branded as personal emails, personal responses, I kind of, not to be rude to the emailer because we love all emails. Ben, do you agree this is like an email from 2018.
8:20Ben Carlson:What do you think it's a little too late for that? What?
8:22Michael Batnick:Like, yeah, listen, the S &P 500 is the S &P 500, but people have been thinking more and more about the NASDAQ for a long time now.
8:30Ben Carlson:I think the brand is there probably to be a more core position. Paul, I'm sure you hear that a lot, like that a lot of investors do have that as an anchor in their portfolio now, correct?
8:39Paul Schroeder:100%. It's been a pretty consistent narrative that we've seen. I mean, And NASDAQ 100, QQQ and QQQM account for 27 % of all AUM within the large cap growth ETF category in the US. We are the 500 pound gorilla there within that space. And that is because more and more people, especially since COVID, have used the Qs and QQQM as the core part of their portfolio.
9:04Ben Carlson:So it's a quarter of all large cap growth money is now somehow tied to the NASDAQ 100. Is that what you said?
9:10Paul Schroeder:That's correct.
9:11Ben Carlson:Wow. Oh, wow. That's probably bigger than I thought. So a lot of people obviously are already there. Let's talk about the rocket ship in the room. Are you surprised at the degree to which people have seemingly cared about index inclusion rules in the past month or so? Because there obviously are people who have very strong opinions about this. And it seems like a lot of people are maybe learning on the fly about how this all works when it comes to a large IPO. I'm just curious if you're surprised at the degree to which the attention that this SpaceX IPO has gotten in terms of index inclusion.
9:43Paul Schroeder:Yeah, I would agree with that statement over and over, Ben. This has been one of the busiest times that I've had in my job covering the queues for the past six years now that I've seen. I mean, 2023 was pretty busy when NASDAQ 100 went through a special rebound, but that was about a week and a half long. This has been pretty consistent over the last month. And I think it's a convergence of a few different timely topics, right? Obviously, everyone loves talking about Elon Musk, what's he's doing, whether you like him or not. And then the valuation of SpaceX, you know, before pre-IPO, people were saying 1.5 to 2 trillion.
10:22Paul Schroeder:We haven't seen an IPO like that before. So I think all those different things have raised interest among investors along with the change of the fast entry rules that NASDAQ released in May.
10:35Michael Batnick:There was a certain cohort of people who do not like Elon Musk, do not like the inclusion. Oh, you're changing the rules. I think this rule change is frankly overdue. Now, maybe it hasn't been necessary because private companies have been staying private for so long that we haven't had IPOs of this size. But I think it would be weird if the NASDAQ 100 was not in the index. Wait, what did I just say? SpaceX in NASDAQ. What did I say? I said NASDAQ? Yeah. Yeah. Okay. I think it would be weird if a multi-trillion dollar market cap company was not in the index. And I think what NASDAQ, I know you work for Invesco, what NASDAQ, what they're doing with the NASDAQ 100 in terms of making sure that it is not overrepresented in the index and adjusting for the float makes a lot of sense.
11:36Michael Batnick:So it's not like investors have to swallow$2 trillion of Elon Musk. Can you talk about what that inclusion is going to look like and how you all are adjusting for what's available?
11:46Paul Schroeder:I really appreciate how NASDAQ approached fast entry in general. And as you alluded to, fast entry isn't something that's completely new. Other index providers have had it, right? Russell, MSCI, CRISP, they all have fast entry provisions. So it's nothing new. And Michael, to the point that you made, I would be surprised if a company like SpaceX, which definitely has the pedigree of being a NASDAQ 100 company, wasn't included. So throughout all the conversations I've had over the past few weeks, it comes down to, okay, how's it going to be weighted, right? And basically looking at free float versus total market cap.
12:28Paul Schroeder:And if that free float number is less than one third of the total market cap, NASDAQ applies a flat 3x multiplier to that free float to give you the modified market cap weight. So I know that's a lot of jargon. What does this actually look and feel like with SpaceX? So SpaceX today has a free float of approximately$85 billion. Their total market cap is closer to$1.75 to$2 trillion. So that is definitely under that one-third threshold. You multiply that$85 billion times three, which gives you the weight. It comes in to the NASDAQ 100, which will be after the close on July 7th. They just made that announcement on Friday.
13:07Paul Schroeder:And it'll probably be at a weight between 1.2 % to 1.4%, depending on how the market moves, not just SpaceX, but the other components of the NASDAQ 100 as well. So the amount of attention that it's gotten, the inclusion, I'm glad that it's there. Because you have a lot of individual investors who are saying, maybe I should just go out and buy SpaceX. But when you see SpaceX trade between$150 and$229 in the first few weeks of trading, it's like, how do you commit serious capital to that without worrying about the extra volatility that might come with it? NASDAQ 100 allows, at a pretty decent weight compared to some of these other indexes, to give you exposure to a company.
13:50Ben Carlson:I'm curious, maybe you could walk us through some of the history. Like how flexible are these committees, have these committees been in the past? Because I think some people think that it's just totally robotic and there's rules that you follow and you have to follow the rules. But obviously the market environment is changing and the index providers are changing with it. Just maybe walk us through like how much flexibility there is in this process.
14:12Paul Schroeder:I think with an index like NASDAQ 100, there's a phenomenal amount of flexibility. But I think what's more important, there's a great deal of transparency, right? We know any investor could go and look up the methodology of NASDAQ 100 and see if a company is going to be included or not, if it's a newly listed IPO. Just to contrast that versus S &P, which is a fantastic company, but they ruled that they are not adding a fast entry provision. And, you know, they did that last month through a consultation process and they still have their 12 month seasoning process. They also have a profitability screen and then also a committee.
14:51Paul Schroeder:Right. So I think when looking at these different ETFs, you have to assess and if investing in an IPO is important to you. We've also heard the exact opposite where I don't want to invest in these newly IPOs because they're not profitable. Right. I think you need to take all those different things into account about how these different index providers approach. and choose the one that aligns best with how you think.
15:15Ben Carlson:So one of the big narratives around the private markets is the fact that these companies are staying private longer. It's taking them much longer to come public. We're talking about multiple potentially trillion-dollar IPOs. This year, we've already had one. And some people think, well, hey, we're being left out. And it's kind of funny to think, I think over the last 15 years, the NASDAQ 100 I look today is up almost 20 % per year. So it's like 19 % in change. We're recording this in late June. Do you think that investors really are missing out a lot by not having some of these private markets come public earlier?
Read the full transcript
15:50Ben Carlson:Or do you think that really because the massive behemoths and mega caps have had a big part in all the gains, that it really wouldn't have as big of an impact as people think?
15:59Paul Schroeder:Where I would say we've probably seen the greatest effect, Ben, has been within small cap, right? I mean, if we rewind the clock 25 years ago, traditional path company goes public. They're probably listed as a small cap company or a mid cap company and they make their way up. I think you can attribute that as part of the reason small cap has underperformed over the past 10, 15 years. But I think overall, when you think about investing in private markets, it's a lot more complex than investing in public markets. you also are seeing more and more companies like Invesco and other asset managers providing other ways to gain access to that, which I think is most interesting.
16:39Paul Schroeder:Now, whether or not that's still an appropriate investment for that investor, only they could decide that probably with the help of a financial professional because they are more complex. But what I appreciate is how there has been more availability to access these private markets. And during this time, while you see all these different valuations come out about whether they call them unicorn companies or these these private companies that have grown in valuation at the end of the day we still have broader market indexes performing very well throughout the time so i wouldn't necessarily say investors have missed out especially over the last three years with the trade primarily being tech driven ai focused there there's so many different investments uh out there available as a way to slice and dice that And I think appropriately, as these companies do go public, they are being included.
17:33Michael Batnick:Why do you think the NASDAQ 100 has outperformed some other tech benchmarks? Like part of me thinks it's sort of random, but the outperformance seems to be persistent enough that it's, and the size, like 4 % to 5 % a year, makes me question that assumption of it being random. Is it just market caps beating everything? Is it that simple?
17:59Paul Schroeder:Well, I think over the past three or five years, everything's done well, even though NASDAQ 100 has returned just under 20 % per year. I think it comes down to dispersion in the market. How concentrated is that performance? And where is the performance being driven from? Right. We've had a handful of companies up until this year drive that strong outperformance. They are NASDAQ listed companies. They've grown to be very large. Right. And have been a key contributor of that outperformance. But I think when you look at it from a longer term basis, what you generally tend to see are more innovative and technologically focused companies list on the NASDAQ stock exchange.
18:47Paul Schroeder:We quantify that by looking at how they focus on R &D, what sort of patents they're filing. and what we really feel what has driven that longer-term outperformance is these companies' abilities to innovate and already have a product in place when there's a seismic shift that happens with how consumers behave. You look at COVID, for example, right? When the world changed overnight, world shut down, there were companies inside there that were well-positioned for that work-from-home environment. If you go back in time, though, and take a look at whether it was the dawn of the internet, the dispersion of smartphones and how they affect our lives, social media, which obviously is more of a plan like ad revenue.
19:30Paul Schroeder:NASDAQ 100 companies are at the center of Jason of all those throughout the 21st century. You have these companies who have become the conglomerates of the 21st century as well. So I think of a company like Amazon, which started off as an online bookstore, trying to put Barnes and Noble out of business. They're now one of the largest web service providers in the world, right? So they went from two different areas of the market and where they're focusing, and they saw the market trend and have moved there pretty well. That's pretty consistent through many of these names that are NASDAQ 100 heavyweights, which most importantly has driven the strong fundamental growth that we've seen in the companies.
20:09Paul Schroeder:We all know that although short-term price may fluctuate, what drives long-term performance is fundamentals. Price follows fundamentals. you see earnings and revenue growth outpaced out of the S &P 500 and the Russell 1000 growth, which is the true driver of the longer term outperformance you've seen, Michael.
20:27Ben Carlson:It is interesting because I did this a couple months ago where I looked at, I mentioned the NASDAQ 100 is up almost 20 % per year, less 15 years. I think earnings were up 15 % per year, 14%. So it's like, you're right, the fundamentals have been driving this. Is there any part of you, and I'm asking you to put your analyst hat on here, that's concerned that the performance has been so strong in the NASDAQ that going on, you know, 15, 20 years of high double digit performance. Does that concern you at all from a cyclical perspective?
20:56Paul Schroeder:The prevalent outperformance that we've seen from Q's and QM have made my job a lot easier through the years. And that's one thing that does make me worry, right? I mean, if you think about it in the context of today, where I'm sure you're hearing from your listeners, right? This is another tech bubble like we saw back in 1999 and 2000, right? You know, you have only a few companies driving the performance, you know, whether it's government intervention or regulation or any other numbers, you know, whether it's private credit and the risk with that, the large cap expense these companies are doing.
21:29Paul Schroeder:Sure, those are concerns that I do have. You know, what I really rely on, though, is that I'm just when we run those fundamental growth numbers, right, we're just not looking over the past few years, we're looking at long-term trends that have taken place over the past 25 years. You talked in NASDAQ, the index was incepted back in 1985, technically. QQQ didn't come around until 1999. That fundamental growth story, even with the tech bubble, is still in place going back further. So these are longer-term trends in the market where, of course, you're going to go through periods of outperformance, underperformance with anything.
22:07Paul Schroeder:But when that does happen, And I'm confident with the value that these companies have shown, the balance sheets that they have, and the cash flow they've produced. All right.
22:17Michael Batnick:I'm looking at the holdings, and this surprised me. In order. Ben, listen up. All right. NVIDIA 1. Apple 2. No surprises there. Number three, Micron. What? Number four, Microsoft. Number five, Amazon. Number six, seven, eight, nine, 10, 11, 12. Number 13, Meta. Micron is more than twice as large in the NASDAQ 100 as Meta. And Paul, I'm going to put my Sherlock Holmes hat on here for a second. Is that because Mark Zuckerberg owns so much that it is not counted in the free float adjustment?
23:07Paul Schroeder:Not necessarily. What I would say that comes down more to is just where Meta has been in the earnings that we've seen. If you think back to Q1's earnings announcement from Meta and where they've been, they've obviously been very vocal and they have spent a bunch on trying to have their AI build out come to speed with, I think, those announcements coming to investor disappointment. I think another key factor specific to Meta that we've seen is taking a look at their CapEx versus their free cash flow. And their free cash flow started to turn negative back in Q1 with the Q1 earnings announcement.
23:46Michael Batnick:Paul, sorry to cut you off. I'm talking about the weighting of the companies in the index. What does all of the fundamental stuff have to do with it? Aren't we talking market cap?
23:57Paul Schroeder:We are, but I mean, that market cap is a pure function of the per share price, right? And if investors aren't liking their earnings announcements. They're not liking how much they spend. They may look at free cash flow and say, that concerns me a little bit. And they start selling Meta. That's going to affect their total market cap and affect their weight within QQQ and the NASDAQ 100.
24:18Ben Carlson:Michael, are you thinking that Meta should be a bigger weighting?
24:21Michael Batnick:Meta's market cap is larger than Micron. And yet Micron is a 5.7 % weight. This is as of June 27th. micron is 5.7 percent and meta is 2.6 percent it's it's more it's twice as large more than twice as
24:34Paul Schroeder:large last i looked meta's free float was around 80 to 85 percent right so i don't have microns off offhand but what you'll see though in between quarterly rebalances is that you may see positions that have performed really well or really poorly move slightly right and at the quarterly rebalances, NASDAQ will rerun the weighting methodology, not necessarily make new additions or subtractions, but re-rank them.
25:08Michael Batnick:Well, another example of this is not to belabor the point, but Walmart is the same size as applied materials. Basically, it's 30 basis points larger. But the Walton family owns so much of Walmart that its full market cap is not in the index. That is correct.
25:23Ben Carlson:So, Paul, how much... So, when you do these quarterly rebalances for the NASDAQ 100. How much turnover is there typically when that happens?
25:29Paul Schroeder:A few percentage points, not that much. I mean, on average, QQQ and QQQM are turning over anywhere between 6 % to 8 % on an annual basis, right? So it's not a huge number with most of that 5 % to 6 % coming in the annual reconstitution. So that's where most of it is coming from. The quarterly rebalances are primarily just to make sure that the integrity is in line with the with the methodology.
25:56Michael Batnick:How much interest is there? And I know this may be a tough question to answer. Is there a lot of interest in the Js, the next generation, the juniors, or people just more paying attention to the mega caps because that's what's worked for so long?
26:09Paul Schroeder:There has been more interest within QQQJ through the year where we're actually seeing organic flow come into it. And I think it is because if you think back basically since October of last year, where cracks within certain parts of the AI trade showed up, questions about private credit, how's CapEx being funded, along with software getting smacked pretty good. People have started to diversify. Obviously, what we've seen happen in Korea and really what's been happening within QQQJ over the past 10 months is that AI trade is starting to broaden out outside of GPUs. Everyone was so focused on GPOs from 23 through end of 24, 25.
26:54Paul Schroeder:The move, we saw memory prices start to rise back in 2025 pretty dramatically. Not just like RAM prices, but also storage prices as well. Where you see companies like SanDisk, Western Digital, Seagate perform very well. All companies that were once in QQQJ. So I think what we're naturally seeing in the market, and it's expressed very well, I think, in the Qs and J, is that with any new technology, you do see a broadening out. I think at the end of the day, we are going to see winners and losers. But I think concerns over how Mag 7 has been performing, along with concentration and MegaCap in general, more people have been broadening out.
27:35Paul Schroeder:And now that performance is there and has been there for the past 12 to 18 months, people have been moving more into J.
27:40Ben Carlson:Paul, for people who want to learn more about the Q's or Invesco and their whole suite of innovative ETFs, where do we send them?
27:47Paul Schroeder:Yep. They'd go to Invesco.com.
27:50Ben Carlson:Perfect. Thanks, Paul.
27:51Paul Schroeder:Thank you. All right.
27:54Ben Carlson:Thanks to Paul. Remember to check out Invesco.com to learn more about the Natzak 100 ETF and all their other ETFs. Email us, animalspirits at thecompoundnews.com.
From the publisher
On this episode of Animal Spirits: Talk Your Book, Michael Batnick and Ben Carlson are joined by Invesco's Paul Schroeder to discuss: the Nasdaq 100, index methodology, tech fundamentals, fast entry timelines for IPOs and more.
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Ben Carlson’s A Wealth of Common Sense
Michael Batnick’s The Irrelevant Investor
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Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here:
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This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions. The opinions expressed are those of the speakers, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
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