facebookSince Syfe equity 100 has QQQ ETF as its majority, would it be wise if i just invest in QQQ ETF directly? - Seedly

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Anonymous

21 Apr 2021

Robo-Advisors

Since Syfe equity 100 has QQQ ETF as its majority, would it be wise if i just invest in QQQ ETF directly?

What do you think? Inexperienced investor here

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Chris

21 Apr 2021

Owner and Writer at Tortoisemoney.com

As a beginner, I understand that it is tempting to chase after QQQ for its higher returns as opposed to taking a more divsersified approach. Personally I would recommend the diversified approach (Syfe Equity100) as opposed to putting it all in QQQ. This is because:

  1. QQQ is tech heavy. This exposes yourself to concentration risk in the tech sector and this can be dangerous if tech runs ahead of itself and underperforms. In fact, after the dot-com bubble, QQQ underperformed the S&P500 for almost 14 years before QQQ overtook it in return.

  2. QQQ is US-based. While yes, this risk is minimised by the global nature of many of the companies in QQQ, Equity100 does have exposure to many more geopgraphical regions (e.g., EAFE, Emerging Markets).

  3. QQQ is much more concentrated. QQQ only holds 100 companies vs the 500 that the S&P500 holds and the thousands that total market indices hold.

Of course, that being said, my portfolio is one that is quite concentrated (~10 stocks with the top 4 holdings forming about 60% of the portfolio) so I think if you are aware of the risks and are willing to take them, then taking QQQ is definitely a viable option to get invested.

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