iShares NASDAQ Top 30 Stocks Fund (QTOP)

Overview

QTOP is an Exchange-Traded Fund (ETF) designed to mirror the performance of the top 30 non-financial firms within the Nasdaq-100 Index, focusing primarily on sectors like consumer discretionary and technology. It employs a market-capitalization weighting approach, enforcing caps to ensure no single issuer dominates the fund—22.5% for the largest stake and a combined 48% for any issuers individually exceeding 4.5%. This strategy aims to maintain a diversified portfolio. The fund's holdings are periodically adjusted every quarter to reflect market developments and company changes. QTOP commits a minimum of 80% of its total assets to securities listed in the index, supplementing with derivatives and cash equivalents to closely track the index's performance. Additionally, it partakes in securities lending as a strategy to enhance fund returns.

Products and Services

• Market-Cap Weighted ETFs

This product focuses on replicating the market performance of the top 30 large-cap companies within the Nasdaq-100 Index, excluding financial sector firms. It utilizes a market-cap weighting strategy with specific capping rules to ensure diversification across its portfolio. Such caps are designed to prevent any single company from excessively influencing the fund's overall performance, fostering a more stable and diversified investment option.

• Quarterly Rebalancing

To align with ongoing market shifts and corporate alterations, QTOP engages in a systematic rebalancing of its holdings every quarter. This ensures that the ETF's composition accurately reflects the current landscape of the largest companies by market capitalization within the Nasdaq-100 Index. This rebalancing process is crucial to adapting to valuation changes among the companies constituting the index, thereby maintaining the ETF's strategic focus on mimicking the index's performance.

• Derivatives and Cash Equivalents

In its quest to closely align with the Nasdaq-100 Index's performance, QTOP invests in derivatives and cash equivalents. These financial instruments allow the ETF to fine-tune its portfolio to match the index's returns more accurately. Derivatives are particularly useful in managing the portfolio's exposure to the underlying assets without the need to hold the assets themselves directly, offering flexibility and efficiency in tracking the index.

• Securities Lending

To augment returns, QTOP employs a securities lending strategy. This involves lending out securities within its portfolio to other institutions or investors, generating additional income through lending fees. These fees can enhance the fund's overall returns, providing an ancillary benefit to its primary strategy of indexing.