Talk Your Book: Investing in Next Gen Tech Stocks - Animal Spirits Podcast Recap

Podcast: Animal Spirits Podcast

Published: 2026-02-23

Duration: 25 min

Summary

In this episode, Michael Batnick and Ben Carlson explore the performance and potential of the NASDAQ Next Gen 100 ETF (QQQJ), highlighting its differentiation from traditional tech indices and its appeal for investors looking for growth in mid-cap stocks. They chat with Paul Schroeder from Invesco to unpack what makes these junior stocks worthy of attention.

What Happened

Michael and Ben kick off the episode by discussing the stark performance differences between the largest tech stocks and the rest of the market, specifically referencing the MAG 7's dominance. They highlight that the spread between equal-weight and cap-weighted indices has reached unprecedented levels, prompting a focus on the juniors, or QQQJ, which represents the next 100 non-financial companies on the NASDAQ.

Paul Schroeder joins the conversation to shed light on QQQJ, launched in 2020 as a way to encapsulate mid-cap growth stocks that often fly under the radar compared to the bigger names in the NASDAQ 100. Paul explains that while QQQ is heavily skewed towards large-cap stocks, QQQJ offers broader exposure, including sectors like healthcare and consumer goods, thus providing a more diversified investment option. The discussion also touches upon the potential for certain companies within QQQJ to graduate to the larger QQQ, illustrating the dynamic nature of the tech market.

Key Insights

• The performance gap between large-cap tech stocks and mid-cap growth stocks is widening, highlighting an opportunity in junior tech stocks.
• QQQJ offers diversified exposure in sectors beyond technology, appealing to investors looking for growth without the concentration risk.
• Investors often overlook QQQJ, which tracks the next 100 non-financial companies on the NASDAQ, despite its strong performance.
• The potential for companies in QQQJ to transition into the QQQ underscores the fluid nature of market capitalization and investment strategies.

Key Questions Answered

What is the NASDAQ Next Gen 100 ETF (QQQJ)?

QQQJ, or the NASDAQ Next Gen 100 ETF, includes the next 100 non-financial companies listed on the NASDAQ Stock Exchange after the NASDAQ 100. Launched in 2020, it was designed to extend the successful exposure provided by the QQQ, which consists of the largest tech stocks. Paul Schroeder, the equity product strategist at Invesco, emphasizes that QQQJ captures mid-cap growth opportunities that are often overlooked.

How does QQQJ compare to the traditional NASDAQ 100?

While the NASDAQ 100 is heavily dominated by large-cap tech stocks, QQQJ provides a more balanced exposure to mid-cap companies across various sectors. In the episode, Paul notes that the tech exposure in QQQJ is around 30-32%, compared to about 60% in QQQ. This diversification allows investors to gain access to a wider range of companies, including those in healthcare and consumer sectors.

What are the current performance trends for QQQJ?

As of the recording, QQQJ was up almost 6% year-to-date, contrasting with the QQQ, which was flat. Michael highlights the growing trend where mid-cap stocks like those in QQQJ are starting to catch up, suggesting a shift in market dynamics that could favor these juniors in the near future.

What types of companies are typically included in QQQJ?

QQQJ focuses on non-financial companies ranked 101 to 200 on the NASDAQ, featuring a mix of industries. Paul points out that while many might assume it's tech-heavy due to its connection to QQQ, it includes significant holdings in consumer discretionary and healthcare, showcasing its diversified nature.

Can stocks in QQQJ graduate to the NASDAQ 100?

Yes, stocks in QQQJ can potentially graduate to the NASDAQ 100, especially as they grow in market capitalization. Paul explains that the reconstitution of QQQJ occurs alongside QQQ, with companies moving up based on their performance and market cap. This dynamic creates a pathway for promising mid-cap companies to ascend into larger-cap indices.