Invesco QQQ monthly review

Overview

• For the month of September, QQQ saw an NAV total return of 5.44% and outperformed the S&P 500 Index, which returned 3.65%. The Russell 1000 Growth Index returned 5.31% and the Russell 1000 Value Index returned 1.48%, both underperforming QQQ.¹
• QQQ’s relative outperformance vs. the S&P 500 Index was driven by its overweight exposure and differentiated holdings within the Technology sector and lack of exposure in the Financials sector. 
• QQQ saw inflow of ~$2.987 billion.
• QQQ ended the month with $385.27 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of September, shares traded of QQQ increased by 17.4% month-over-month and notional value traded increased by 21.1% month-over-month.²

Market Recap

QQQ extended its monthly positive performance streak to six months after it advanced by 5.44% on an NAV total return basis for September. U.S. equity markets broadly rallied higher in September with the Nasdaq-100® and S&P 500 both setting new all-time high closing levels on September 22^nd, before pulling back modestly into month end. Equities were propelled higher by a number of significant announcements centered around major partnerships in the artificial intelligence space as well and the Federal Reserve Open Market Committee’s (FOMC) decision to cut interest rates by 0.25%.³ September’s strong equity market performance broke with historical trend as equity markets were poised to embrace the positive despite lingering uncertainty concerning the impact of U.S. trade policy, broadly mixed economic data and the looming October 1^st deadline threating potential federal government shutdown.

Attention at the beginning of the month was focused on softening economic data as both the Institute for Supply Management (ISM) Manufacturing and Services Indexes, two closely watched indicators of economic health and activity, displayed mixed results.⁴ August ISM Manufacturing, announced September 1^st, was reported at 48.7, higher than July’s number, but slightly below consensus estimate of 49.0, implying a weaker manufacturing backdrop than anticipated.⁵ Despite the weaker than anticipated headline, new orders and prices paid came in modestly better than anticipated while employment expectations were weaker than anticipated.

On September 4^th, the ISM Services Index August report was announced at 52.0, above the consensus estimate of 51.0. Prices paid and new orders in services painted a more optimistic picture as prices came in lower than anticipated while new orders came in significantly higher than anticipated. Employment measures in the services index came in slightly below expectations. 

US labor markets also came into focus early in the month with the releases of ADP Employment Change and change in nonfarm payrolls for August being released on September 4^th and September 5^th, respectively. The ADP Employment Change, a measure of the change in private sector payrolls, was underwhelming and totaled private sector jobs increasing by 54,000, well below the consensus economist forecast of an increase of 68,000 jobs. Additionally, initial reports of the Change in Nonfarm Payrolls for August were released showing an increase of 22,000 jobs, which was significantly below the consensus economist forecast of an increase of 75,000. Underwhelming results in both measures stoked concern that hiring at US companies was lower than anticipated, indicating a slowing labor market with fewer job openings.

Equity markets received a boost on September 17^th, when the Federal Reserve Open Market Committee (FOMC) announced the decision to cut interests rates by 0.25% to a range of 4.00% to 4.25%. Federal Reserve Chairman, Jerome Powell cited growing signs of weakness in the U.S. labor market as a primary catalyst for the committee’s decision, also commenting that labor market demand had softened, and the recent pace of job creation appeared to be running below the break-even rate needed to hold unemployment constant. In a post meeting statement, Chairman Powell acknowledged ongoing concern over inflation pressures resulting from U.S. tariffs but acknowledged the central bank’s focus concerning their balance of risks had shifted more toward the labor market and maximizing employment and away from prices and inflation. The move, while widely expected, was met favorably by equity markets with FOMC signaling the potential for another two cuts of 0.25% by the end of 2025 in their updated dot plot projections, one more than had been projected in June.

Despite lingering concerns over the impact of tariff policy by the FOMC and investors alike, inflation data was generally muted. In the middle of September, the August Consumer Price Index (CPI) was released and was viewed as fairly benign.⁶ Despite the FOMC and broader concern among investors that the data would start showing the adverse effects of tariffs, with spikes in the reading, year-over-year CPI was reported at 2.9%, only slightly above the 2.8% forecast, while the core CPI reading (which strips out the volatile food and energy components) was reported at 3.1%, in line with economists’ estimates. On a month-over-month basis headline CPI was reported at 0.4%, slightly above the expectations of 0.3%. Meanwhile the month-over-month core CPI reading came in at 0.2%, in-line with expectations. The August US Producer Price Index (PPI) results were reported significantly below their respective estimates, with a year-over-year print of 2.6%, well below the consensus economist estimate of 3.5%.⁷ On a month-over-month basis headline PPI was reported at -0.1%, below the consensus estimates of 0.3%.

QQQ Performance

From a sector perspective, four of the ten sectors represented in QQQ finished in positive territory for September. Technology was the best performing sector, which advanced by 8.27%, followed by the utilities sector which returned 5.78%. QQQ’s relative outperformance versus the S&P 500 was driven by its overweight exposure to and differentiated holdings in the Technology sector and its 0% exposure to the financials sector. The Technology sector averaged a 63.29% weighting within QQQ and saw total return of 8.27% compared to a 40.24% average weighting in the S&P 500 and total return of 7.67%. The Financials sector is not held within QQQ compared to the 10.72% average weighting within the S&P 500 for September with a total return of 1.31%.

Standardized performance - Performance quoted is past performance and cannot guarantee comparable future results; current performance may be higher or lower. Visit invesco.com/performance for the most recent month-end performance. Investment returns and principal value will vary; you may have a gain or loss when you sell shares. Fund performance reflects fee waivers, absent which, performance data quoted would have been lower. Invesco QQQ’s total expense ratio is 0.20%. Index performance does not represent fund performance.

The Industrials and Consumer Discretionary also contributed to QQQ relative performance vs. the S&P 500. The Industrials sector averaged a 3.79% weighting in QQQ and saw total return of -2.96% compared to a 11.34% average weighting in the S&P 500 and total return of 0.19%. The Consumer Discretionary sector averaged a 18.56% weighting in QQQ and saw total return of 3.52% compared to a 14.55% average weighting within the S&P 500 and total return of 2.61% for September.

Warner Bros. Discovery Inc. was the best performing company in QQQ for the month of September. On September 11^th, headlines announced Warner Bros. Discovery was set to be the subject of a takeover bid from rival studio Paramount Skydance. Warner Bros. announced in June that the company planned to split into two separate businesses with one business focused on cable TV and the other business predominately focused on streaming and studio. In the Wall Street Journal’s report on the matter it had been mentioned that sources familiar with the situation at Warner Bros, noted that executives at the company believe that Warner Bros. would be able to receive a sizable premium for Warner Bros streaming and studio business once the segments are separated from the company’s legacy cable television networks, which carry a sizable debt load. In August, Paramount was taken over by David Ellison, independent filmmaker and son of Oracle co-founder, Larry Ellison. The Wall Street Journal also reported that the Paramount offer is being backed by the Ellison family whose patriarch is the world’s second richest, boasting a worth of ~$383 billion at the time of the report. Both Warner Bros. Discovery and Paramount failed to comment on or confirm the news, however, shares of Warner Bros. rose ~55% in the next three trading sessions following the Wall Street Journal’s report.

AppLovin was a notable performer within QQQ. The software and advertising company’s performance was in large part driven by the announcement that the company would be included in the S&P 500 index. Announcement of the news occurred after market close on September 5^th, with shares of AppLovin rose over 11% in the next trading session.

Artificial Intelligence (AI) continued to be a key driver of focus for market participants in September. Mega-cap technology names maintained their strong performance, propelled by a flurry of notable announcements within the AI landscape. Headlines were dominated by the announcement of multiple multi-billion dollar strategic partnerships regarding planned semiconductor development and data center build out to support the rapidly growing infrastructure and power demands associated with AI.

Nvidia continued to be front and center within the broader secular trend with the announcement of strategic partnership with OpenAI who plans on building at least ten gigawatts of artificial intelligence data centers. These data centers will utilize Nvidia components as Nvidia plans to invest up to $100 billion in the project. It is projected that the first phase will be online in the second half of 2026. Additionally, Nvidia also announced in September its partnership with Intel—a $5 billion investment with the intent to co-develop chips for PC and datacenter buildouts meant to power the vastly growing demand for AI datacenters. The announcement detailed that Intel would plan to use Nvidia’s graphic technology in upcoming PC chips and that intel would be providing processors for data center products built around Nvidia’s hardware and full stack technologies.

Broadcom was also in the headlines as the company announced its partnership with OpenAI. Reports noted that Broadcom and OpenAI would team up to develop AI accelerators chips. Broadcom would assist in the design and also manage the production of these AI accelerator chips which are set to begin shipping in 2026. Reports noted sizable demand for the accelerator chips with orders already totaling more than $10 billion.

Trading Stats

For the month of September, shares traded of QQQ increased by 17.4% month-over-month along with notional value traded increased by 21.1% month-over-month. The month saw an average of 53.95 million shares trade each day (vs. 45.95 million last month) for a value of $31.7 billion (vs. $26.2 billion last month). That compares to averages of 65.24 million shares and $6.90 billion over the life of the fund, and 41.62 million shares and $21.64 billion for past 12 months.