Invesco QQQ Sponsor Spotlight: Rethinking Innovation

Please welcome to the stage Paul Schroeder, QQQ, equity product strategist at Invesco, for a conversation with Bloomberg’s Michelle Lynn. Hi there. I’m Michelle Lane, Global Head of Data Science and Insight for the Bloomberg Media Organization. I’m joined by Paul Schroeder, QQQ Equity Product strategist for Invesco’s QQQ Sponsor Spotlight Rethinking Innovation. Paul, welcome. Thank you so much for being here with us. Yeah, thanks for having me. All right, let’s dive in. Can you give us a quick reminder of what QQQ is? Sure. So I’m sure most of you have heard of QQQ but just as a reminder QQQ is ATF that tracks the NASDAQ 100. Now the NASDAQ 100 index is comprised of the 100 largest non financial companies listed on the NASDAQ Stock Exchange and really has become one of the most pre eminent large cap indices in the world and has the appetite for investing in innovation grown. I I think it definitely has you know and obviously the last year is a great example of that. You see a lot of individual investors who use either ETFs or use individual by individual companies to gain exposure to a given technology. I think what we’ve learned though through the years as QQQ has been around now for for some time is that QQQ has consistently provided targeted exposure to some of the most innovative companies in the world without having to take on a risk of buying a single stock or purchasing an ETF that may only give you exposure to to 1 sector. Really if we think about some of the technologies that have changed the way we do business and and live in our day-to-day lives, companies within QQQ have played an integral role and either have been at the center or adjacent to to those technologies. You know, if we, we really think of let’s say the the dawn of the Internet, the the rise of social media, the pivot to people using smartphones on a day-to-day basis and obviously more recently the focus on AI, QQQ companies that have played a prominent role to to bringing those to to market. And and why is that? You know, QQQ companies have shown a real high propensity to innovate throughout the years. Now at Invesco, we obviously focus on numbers and figures as being an asset manager and we really want to quantify what that innovation looks like And we really do it through two metrics, the first being research and development. And you see your average QQQ company out spending your average S&P 500 company by about 30%. Now the really interesting thing with that is that if you take those QQQ companies out of the S&P 500, then multiple goes up to about 10X. The second metric that we look at would be patent activity. And if we take a look at last year’s patent activity as an example, we saw QQQ companies account for about 40% of all natural language processing patents filed across across the board. So really great way to to quantify innovation and how has that benefited QQQ. Yeah, so we really feel that these companies propensity to be highly innovative has really propelled their fundamental growth. We we’ve seen revenue over the past 10 years, the revenue growth outpaced that of the S&P 500 by about two X. And if you take a look at revenue and dividend growth, it’s about 70% higher. And you’ve been delivering access to innovation for quite a while. Yeah, we we definitely have. So we just celebrated QQQS 25th anniversary back in March which we were very excited about. QQQ has grown to become the 5th largest ETF in the world, almost 260 billion with within the fund. But I think overall if there’s anything that I would like the folks to take away from here is that the companies within QQQ have changed quite a bit. QQQ overall has changed quite a bit over the past 25 years. You know you see sector exposure within IT come down quite a bit throughout the years. You see rise in healthcare, consumer discretionary communication services grow quite a bit over the last few years. So I think QQQ has changed. The companies within IT have changed from where they were 25 years ago and I think it’s really proven to be a great way, a tax efficient, cost effective and liquid way to to really access some of the most innovative companies in the world. Well, thank you so much for being here with us today, sharing your insights on rethinking innovation as part of Invesco’s QQQ sponsor spotlight. Thanks Michelle.