01-02-2021, 03:19 AM
How does an ETF like QQQJ increase in value?
<!-- SC_OFF --><div class="md"><p>I bet this is a pretty dumb question to ask, but I think the answer I receive will also give me knowledge on the stock market itself.</p> <p>So, how does QQQJ increase in value? If they are invested in the 101-200th NASDAQ companies, is it because when the companies they hold raise in value and get into the top 100, they sell the shares with their profits and reinvest it into the next 101-200? How does this ETF make money if it's caps itself to 101-200? Is it also because as the stock market itself increases, the average value of the 101-200 increase as well? Are both of these theories correct and both together have a compounding effect?</p> <p>On this note, does an ETF like this pose a large risk? It seems to me that considering it follows the NASDAQ, it should still increase in price over time similarly to SPY with the S&P 500. If this is the case, what is stopping me from selling all my SPY shares and investing in this lower-cost ETF? Is it because the 101-200 is more volatile?</p> <p>Thanks in advance
</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/xMAXPAYNEx"> /u/xMAXPAYNEx </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ko90m1/how_does_an_etf_like_qqqj_increase_in_value/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ko90m1/how_does_an_etf_like_qqqj_increase_in_value/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>I bet this is a pretty dumb question to ask, but I think the answer I receive will also give me knowledge on the stock market itself.</p> <p>So, how does QQQJ increase in value? If they are invested in the 101-200th NASDAQ companies, is it because when the companies they hold raise in value and get into the top 100, they sell the shares with their profits and reinvest it into the next 101-200? How does this ETF make money if it's caps itself to 101-200? Is it also because as the stock market itself increases, the average value of the 101-200 increase as well? Are both of these theories correct and both together have a compounding effect?</p> <p>On this note, does an ETF like this pose a large risk? It seems to me that considering it follows the NASDAQ, it should still increase in price over time similarly to SPY with the S&P 500. If this is the case, what is stopping me from selling all my SPY shares and investing in this lower-cost ETF? Is it because the 101-200 is more volatile?</p> <p>Thanks in advance
</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/xMAXPAYNEx"> /u/xMAXPAYNEx </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ko90m1/how_does_an_etf_like_qqqj_increase_in_value/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ko90m1/how_does_an_etf_like_qqqj_increase_in_value/">[comments]</a></span>Kind Regards R