Invesco QQQ monthly review

Overview

• For the month of June, Invesco QQQ ETF saw an NAV total return of 6.32% and outperformed the S&P 500 Index which returned 5.08%. The Russell 1000 Growth Index returned 6.38% outperforming QQQ, while the Russell 1000 Value Index returned 3.42%, underperforming QQQ.¹
• Invesco QQQ’s relative outperformance vs. the S&P 500 was driven by its overweight exposure within the Technology sector and its underweight exposure and differentiated holdings within the Consumer Staples sector. The Technology and Consumer Staples sectors were the biggest contributors to relative performance vs. the S&P 500 Index. 
• QQQ saw outflow of ~$1.60 billion.
• QQQ ended the month with $353.14 billion in AUM and remained the 5th largest ETF in the US (based on AUM).
• For the month of June, shares traded of QQQ declined by 2.23% month-over-month although notional value traded increased by 2.44% month-over-month.

Market Recap

Following strong returns in May, equity markets displayed further resilience throughout June. Equity markets continued to march higher with another month of strong returns despite a backdrop of uncertainty and heightened geopolitical tensions. Volatility continued to trend lower for the third consecutive month as equity markets were able to shrug off lingering uncertainty around US trade policy, concerns over slowing economic growth projections and conflict and heightened tensions in the Middle East. 

In June, the Nasdaq-100® Index and the S&P 500 Index each closed the month at new all-time highs, surpassing their respective previous all-time highs, both set on February 19^th. The Nasdaq-100 Index returned 6.34% in June, while the S&P 500 returned 5.08%. The Nasdaq-100 closed the month at record highs at a level of 22,679.01, or 32.70% higher than its lowest daily close of 17,090.40, set on April 8^th. The S&P 500 closed the month at a level of 6,204.95, or 24.53% above its lowest daily close of 4,982.77 set on April 8^th.

The CBOE Volatility Index (VIX), a commonly used gauge for volatility and investor fear, ended June at 16.73, or 9.91% lower than a month earlier.² Volatility decreased for the second consecutive month, breaking trend from earlier in the year with the VIX closing higher for three consecutive months from February through April. Additionally, intraday highs on the VIX index continued to trend lower as the market remained relatively stoic in response to burgeoning conflict in the Middle East.

US trade policy developments continued to be top of mind as market participants looked for signs of progress. The first signs of progress were reported on June 5^th as President Trump and President Xi of the Chinese Communist Party held a 90-minute call. Reports mentioned that both President Trump and President Xi agreed to further trade talks, with President Trump acknowledging that trade relations had gotten, “a little off track” remarked after the call that they are now, “in very good shape”.

On June 11^th, US Treasury Secretary Scott Bessent met with Chinese Vice Premier in London with talks focused on the easing of restrictions on Chinese exports of rare earth metals and U.S. technology export restrictions. Fears were raised again on June 20 on reports that rare mineral shipments from China to the U.S. were being delayed, stoking investor fears for a potential breakdown in negotiations. However, on June 26^th President Trump announced that a trade framework with China had been finalized, emphasizing China’s agreement to ease rare earth mineral restrictions.

Tensions in the Middle East reached a boiling point on June 13^th as Israel launched a surprise wave of airstrikes targeting Iranian nuclear and military infrastructure, causing Iranian retaliation on June 14^th. Significant aerial assaults continued between the two nations over the course of the next 10 days, culminating in the U.S. entering the conflict by launching heavy airstrikes on key Iranian nuclear facilities. Ultimately, the Trump administration was able to broker a ceasefire between Iran and Israel on June 24^th. Despite the intensity of the conflict, the impact on equity markets was benign with volatility remaining relatively muted.

May inflation data, reported in June, generally came in softer than anticipated. The mostly favorable readings stirred optimism regarding the timing and magnitude of potential interest rate cuts by the Federal Reserves', Federal Open Market Committee (FOMC).³ The May year-over-year (YoY) Consumer Price Index (CPI) reading increased slightly to 2.4%, up from 2.3% a month earlier.⁴ The CPI month-over-month (MoM) was reported at 0.1%, lower than survey expectation of 0.2%. The May Core CPI YoY reading reported in June (which strips out the more volatile food and energy components) was reported slightly lower than market expectation at 2.8%, while Core CPI MoM was reported at 0.1%, lower than survey expectations of 0.3%. Additionally, the May Core Personal Consumption Expenditure YoY (PCE), reported in June, was reported at 2.7%, slightly above expectation.⁵

May inflation data helped soothe lingering fears of tariff driven inflation for another month. However, the FOMC decided to hold rates steady and Fed Chairman, Jerome Powell, maintained a more hawkish tone regarding FOMC rate policy in his press conference following the rate decision. Powell cited the uncertainty stemming from trade policy as a reason to be more cautious regarding the timing of rate cuts. The FOMC decision and Powell’s comments were met with dissatisfaction from President Trump as Trump remarked, the next appointed Fed Chairmen would need to be supportive of rate cuts.

QQQ Performance

From a sector perspective, all ten sectors represented in QQQ finished in positive territory for June. Technology was the best performing sector, increasing by 9.55% for the month. Relative QQQ outperformance versus the S&P 500 was driven by its overweight exposures within Technology and by underweight exposure and differentiated holdings within the Consumer Staples sector. The Technology sector averaged a 60.01% weighting for the month and saw a total return of 9.55%, compared to the sector’s average weight of 37.31% in the S&P 500 and a total return of 9.61%. Within QQQ, the Consumer Staples sector averaged a 2.70% weighting for the month and saw a total return of 0.19%, compared to the sector’s average weight of 4.32% in the S&P 500 and a total return of -1.27%.

Standardized performance - Performance quoted is past performance and cannot guarantee of 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.

Health Care and Consumer Staples were the worst performing sectors in QQQ, with return of 0.03% and 0.19%, respectively. Health Care averaged a 4.97% weight in QQQ for June, while Consumer staples averaged a 2.70% weighting over the course of the month.

Q1 2025 earnings season officially came in June, with QQQ companies in aggregate reporting very strong results. Of the companies held within QQQ, 70 holdings representing 82% of the portfolio weight reporting beat consensus analyst estimates on revenue (top line) and earnings (bottom line) perspective. The rates of top-line and bottom-line beats by index weight exceed those of the previous quarter’s reported results.⁶ From a Q1 2025 revenue perspective, 76 of the 100 QQQ companies, representative of 85.2% of the portfolio, beat consensus revenue estimates, while 24 of the 100 QQQ companies, representative of 14.8% of the portfolio, missed revenue expectations. For the 76 companies reporting revenue beats, the average beat was 2.5% above consensus estimate, while the average miss for the 24 companies missing estimates was -2.5%.

Additionally, from a Q1 2025 Earnings perspective, 83 of the 100 QQQ companies, representative of 89.7% of the portfolio, beat consensus earnings estimates. For the 83 companies beating analyst earnings expectations, the average beat was 9.0% above consensus estimates. Meanwhile, 17 of the 100 QQQ companies, representative of 10.3% of the portfolio reported earnings below their respective consensus analyst estimate. The average miss for these 17 companies was 8.4% below consensus analyst estimate.

The Q1 2025 earnings results for Nasdaq-100 companies demonstrated significant fundamental growth from Q1 results a year earlier. The weighted average earnings growth for the Nasdaq-100 was 21.6%. Significantly outpacing both the weighted averages of the S&P 500 (+13.0%), the S&P 500 Growth (+16.6%), the S&P Midcap 400 (-1.6%) and the S&P SmallCap 600 (-7.6%).

Nvidia became the largest company in the world by market capitalization in June finishing the month at $3.85 trillion. The company’s stock was up 16.93% for the month as the company announced the expansion of their cloud computing business with DGX Cloud Lepton, along with new partnerships in Europe to expand AI capabilities.

On June 25^th, Micron Technology reported its fiscal Q3 2025 results for the period ending May 29, 2025. Micron announced strong results reporting revenue of $9.3 billion or 5.09% above the consensus analyst estimate of $8.6 billion. Revenue growth was significant from a year prior with fiscal Q3 2025 revenue growing ~36% from a year earlier when the company reported revenue of $6.8 billion. Sanjay Mehrota, Chairman, President and CEO of Micron remarked on the company's earnings call, “Micron delivered record revenue in fiscal Q3, driven by all-time-high Dynamic Random Access Memory (DRAM) chips revenue including nearly 50% sequential growth in HBM revenue. Data center revenue more than doubled year-over-year and reached a quarterly record, and consumer-oriented markets had strong sequential growth”. The reported revenue was a record result for Micron, which was driven by a new high-water mark in DRAM revenue. 

Micron reported adjusted earnings per share of $1.91 or ~19% higher than the consensus analyst estimate of $1.60.⁷ The reported quarterly earnings per share represented year-over-year  growth of ~208%. Micron’s CEO commented, “We are on track to deliver record revenue with solid profitability and free cash flow in fiscal 2025, while we make disciplined investments to build our technology leadership and manufacturing excellence to satisfy growing AI-driven memory demand”. Share of Micron increased 30.48% during the month of June.

Trading Stats

For the month of June, shares traded of QQQ declined by 2.23% month-over-month along with notional value traded increasing by 2.44% month-over-month.⁸ The month saw an average of 46.26 million shares traded each day (vs. 47.31 million last month) for a value of $24.67 billion (vs. $24.09 billion last month). That compares to averages of 65.41 million shares and $6.70 billion over the life of the fund, and 39.16 million shares and $19.24 billion for the past 12 months.