On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth discussed the iShares Nasdaq Top 30 Stocks ETF (QTOP) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF overall.

Chuck Jaffe: One fund, on point for today. The expert to talk about it. This is the ETF of the Week.

Yes, welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth, the head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools you need to be a savvier, smarter ETF investor, and to get more details on the new newsworthy, trending, and timely ETFs that we talk about here.

Todd Rosenbluth, it’s great to chat with you again.

Todd Rosenbluth: It’s great to be back, Chuck.

Chuck Jaffe: Your ETF of the Week is …

Todd Rosenbluth: The iShares Nasdaq Top 30 Stocks ETF (QTOP).

Chuck Jaffe: QTOP, the iShares Nasdaq Top 30 Stocks ETF. You know Todd, oftentimes there’s a lot of buckshot in the name. This one, not so much. It’s basically exactly what it says it is. The top 30 stocks in the Q’s. So, why this fund now?

Todd Rosenbluth: So this is a fund that just came out in October. We like to talk about new and innovative strategies. This is one of those examples. This is for investors, advisors who want precise exposure. We’ve seen the mega-cap stocks lead the market for the last couple of years. People have referred to the Mag Seven, which happens to be eight stocks because Alphabet has two stocks.

But we think the market’s going to broaden out. This is a way of getting a little bit broadening out. So, it’s the 30 largest stocks, not just the eight. It’s not just the top 10. The Nasdaq is where many growth companies happen to be based. And we think that the future looks relatively bright for many of these companies in 2025.

But what’s also interesting to me is what it owns beyond those those top seven companies or eight stocks that are also doing well. So this owns Intuitive Surgical, which is up more than 50%. It owns Costco, which is up more than 50%. We tend to not notice the nontechnology stocks. Within this is tech, plus some other growth-oriented sectors in one portfolio.

What’s not to like about that?

Chuck Jaffe: There is a question in “the top 30,” which is, how is it defining top 30, right? Because you’ve got the largest by market cap, or you’ve got the top 30 stocks in terms of their performance over the last 12 or 18 months or whatever it might be. How are they defining top 30? And how often is the portfolio adjusted?

Todd Rosenbluth: So this is on a market-cap-weighted basis. So this is not the fastest growing, but this is the the Nasdaq 100. We should probably should start with that. It’s the Nasdaq-100 that people are familiar with. The Triple Q’s is an ETF that’s tied to that. This is a subset. And so it will rebalance to make sure it owns the top 30 stocks a few times during the year to ensure that you’re getting that precise exposure.

There’s an ETF that’s focused on the Dow 30. But this is the Nasdaq. And the Nasdaq is where those growth companies happen to be based and listed. And of course, you’re going to get Apple and Microsoft, and Nvidia, but you’re going to get 27 other great companies as well.

Chuck Jaffe: But that also is one of the issues with this fund to some extent: People already have these stocks. Like, as much as you might want more of an Intuitive Surgical or heck, you might want more Apple and more Microsoft. You’ve got them.

So, what role does this serve in a portfolio, at a time when people are worried that maybe they’re over concentrated in the Magnificent Seven? Because that’s what’s been leading the market and driving performance so much.

Todd Rosenbluth: So, I think there are a couple of use cases for this. One, if you own the Nasdaq-100 or even the S&P 500 perhaps, and you want to tilt towards those mega-cap companies for 2025, but not just the seven or eight stocks. You want to tilt a little bit. So, 30 stocks is a reasonable amount for that to overweight your exposure.

I also think there’s a use case here for people who own individual stocks but want the benefits of diversification, but don’t want to end up too diversified. So they don’t necessarily want 100 stocks within their portfolio. They want to lean on those heavyweight mega-cap growth companies, to lead the market higher.

If you’re concerned about the market-cap-laden companies, the largest companies being too big and not being able to grow, then this is probably not the ETF for you. Because it’s still going to own those companies, even if it owns 20 plus-additional companies, it’s still going to own those. There’s another ETF for you. But there’s a lot of use cases that we find for that precise exposure in one diversified trade, as opposed to owning individual stocks.

Chuck Jaffe: These stocks, of course, are highly liquid. This is not one of those ETFs where you say, hey, has it gotten to critical mass? But some people would wonder why this fund, even though it’s only been out a couple of months, only has like $60 million in assets in the first couple of months.

Do you believe that the market understands this market case and is going to wind up getting excited about this?Because normally, if you said, hey, we’re going after it, we’re going after the biggest, highest-flying performers in the highest-flying part of the market, you’d get some high-flying numbers. And this one hasn’t achieved it yet.

Todd Rosenbluth: If the comparison is the iShares Bitcoin Trust ETF (IBIT), which launched this year and has $50 billion, then yes, the over-$70 million in assets that this ETF has gathered in roughly six or seven weeks is going to pale by comparison. But this is still a successful fund. This fund will very quickly cross that $100 million assets under management threshold, which will help it to be more viable for many investors.

And you’re right. It owns the largest, most liquid stocks, or among the largest, most liquid stocks that trade on the Nasdaq. There’s a lot of liquidity that’s here. It’s still early days in awareness for an ETF. We expect we’re going to see continued traction. This is a great way of adding on to an existing portfolio that owns equities.

But you want the benefits of diversification, and 30’s a nice round number to get precise exposure.

Chuck Jaffe: Is your use case, as you talked about it, that this is that add-on and not the core? Because there would be some people who would say, why would I buy the Q’s when I can distill the Q’s down and buy the top 30? You know, kind of get the Q’s on steroids, if you will, as opposed to buying the broader index.

But the broader index would more normally be the core, and this would be that tilt or add-on. So is there any case that this, for somebody who’s a high-risk investor, could be your core and you could get rid of the Q’s and tighten up this way?

Todd Rosenbluth: Certainly. There is an opportunity for people who own the Nasdaq-100 and all 100-plus stocks, that are part of the Nasdaq-100. I say stocks because companies have multiple share classes. There’s an opportunity to replace such a strategy with a slightly more concentrated top 30 stocks that QTOP offers. That’s certainly the case.

For people who want to lean in more heavily towards those mega-cap companies. this is an opportunity. So with any ETF, there are lots of use cases. You could add this on and concentrate a little bit more. You could replace.

And if you are one of the many folks that are listening to this and hear me on a weekly basis talk about ETFs but don’t own any ETFs, this could be a great way of entering into the ETF marketplace. Because it hones in and concentrates on many of the stocks you know. In fact, you will know all of the holdings. That isn’t always the case with an ETF. You should know all of the stocks that are in here. And if you don’t then, you may want to do a slight bit of homework.

But I feel confident people are going to look inside the portfolio and know what’s inside it.

Chuck Jaffe: Yes! This is distinctly a fund that my father could have loved. My dad always used to say that he liked to look into the funds he owned and be able to see names that he recognized top to bottom. These are all recognizable names. It is QTOP. The iShares Nasdaq Top 30 Stocks ETF. The ETF of the Week, from Todd Rosenbluth at VettaFi.

Todd, great stuff. See you again next week!

Todd Rosenbluth: I’ll see you next week. We’re almost at the end of the year!

Chuck Jaffe: Absolutely! But there’s still good stuff to go. And the ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yeah, I’m Chuck Jaffe. I’d love it if you check out my hour-long weekday show, which you can find at MoneyLifeShow.com or on your favorite podcast app.

Now, if you’re searching for great information on your favorite ETFs, or maybe just the exchange traded funds you’re thinking about adding to your portfolio, then look no further than VettaFi.com, where they have all the tools you need to be a better investor.

They’re on X at @Vetta_Fi, and Todd Rosenbluth, their head of research, my guest, he’s on X as well, at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Follow along on your favorite podcast app to make sure you don’t miss an episode. And we’ll introduce you to another great ETF next week.

Until then, happy investing everybody!

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