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QQQ Could See Major Rebalancing as Nasdaq 100 Weighting Changes

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Nasdaq is aiming to reduce the weight of Apple, the juggernaut tech stock that currently accounts for 20.5% of the Nasdaq 100% and 20.36% of QQQ.

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Nasdaq OMX (NDAQ) is planning sweeping changes to the way the Nasdaq 100 is weighted, and the changes could mean significant rebalancing is in store for the PowerShares QQQ (QQQ), the tracking ETF for the Nasdaq 100 index.

Nasdaq is aiming to reduce the weight of iPad maker Apple (AAPL), the juggernaut tech stock that currently accounts for 20.5% of the Nasdaq 100% and 20.36% of QQQ. When the rebalancing takes effect on May 2, Apple will account for just 12.3% of the Nasdaq 100.

More than $330 billion worth of assets track the index via exchange-traded funds, mutual funds, options and futures, according to the Wall Street Journal. QQQ had almost $24.4 billion in assets under management as of April 4, according to the PowerShares website.

Following the rebalancing, Google (GOOG) will see its weight in the Nasdaq 100 boosted to 5.4% from 3.8%. Intel (INTC) will be increased to 4.2% while Microsoft (MSFT) and Oracle (ORCL) will rise to 8.3% and 6.7%, respectively.

Counting Apple, 82 members of the Nasdaq 100 will see their weightings reduced, while 18, including the aforementioned names, will be increased, the Journal reported.

At the heart of the matter is that given the way the index is balanced, Apple accounts for far too big a percentage of the index's weight. As the Journal notes, Apple currently has a weight equivalent to five times the size of Google's while having a market cap that is just twice the size of the Internet search giant.

Nasdaq estimates that for every $1 billion directly tracking the index, such as through mutual funds or ETFs, 9.5 million shares will change hands, the Journal reported.

The Nasdaq 100 was formed in 1985 and tracks the 100 largest nonfinancial companies listed on the Nasdaq. QQQ has average daily volume of 66.1 million shares, making it one of the most active stocks trading in the US.


Editor's Note: This content was originally published on Benzinga.com by The ETF Professor.

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