iQ NASDAQ 10 Model
CURRENT MODEL SELECTIONS ARE ON THE MEMBERS PAGE.
INVESTMENT OBJECTIVE
The iQ Nasdaq 10 Model seeks capital appreciation by identifying and choosing the top ten stocks of the Nasdaq 100 Index through a sophisticated multi-factor selection process.
UNEMOTIONAL & RULES-BASED PROCESS
The iQ NASDAQ 10 Model implements the following multi-factor rules-based process:
Begin with a starting universe of NASDAQ 100 stocks
Apply a multi-factor screening process that includes the following SIX factor categories and select the top ten:
Capital Efficiency
Return on Invested Capital (ROIC)
Price Momentum
6-month change in 36-month CAPM Alpha,
9-month price momentum,
52-week high versus low
Volatility
Adjusted 50-Day Volume Signal
Balance Sheet Strength
Accrual Ratio
Valuation
Sales-to-Enterprise Value ratio
Operating Cash Flow-to-Assets ratio
Free Cash Flow-to-Equity ratio
Historical Growth
Industry relative one year change in Sales-to-Price ratio
The Model reconstitutes every Feb, May, Aug and Nov.
Investing in NASDAQ 100 stocks
Consider Nasdaq 100 companies for the following reasons:
Track record of outperformance: Over the years, the Nasdaq 100 has shown strong long-term performance compared to broader market indices. The index has been driven by the growth of technology and other innovative sectors, making it an attractive investment option for achieving competitive returns.
Diversification: Including Nasdaq 100 companies in client portfolios can enhance diversification. The index spans various sectors, including technology, healthcare, consumer discretionary, and more. This diversification helps mitigate risk by reducing reliance on any single sector or industry.
Growth potential: The Nasdaq 100 consists of innovative and high-growth companies primarily from the technology sector. These companies often drive transformative changes and have the potential for rapid expansion, providing an opportunity for significant capital appreciation.
Investor familiarity: Nasdaq-listed companies are often well-known and widely followed by investors. This familiarity can help advisors communicate investment decisions more effectively to their clients and build trust, as clients may already be familiar with the companies' products, services, and brand recognition.
Liquidity and Visibility: Nasdaq-listed companies are generally well-established and well-known, with high market visibility. Market participants, including institutional investors and analysts, closely monitor the Nasdaq 100 index. This increased visibility and liquidity may provide investment advisors with easier access to trading opportunities and possibly better pricing when purchasing or selling shares.
A Time-Tested & Multi-Factor Process
A multi-factor process has distinct advantages over a single-factor approach when it comes to stock selection. The multi-factor models at iQUANT are intended to provide a more nuanced and holistic perspective on stock selection by taking into account multiple factors such as valuation, growth, profitability, and market sentiment. This multi-factor approach allows our models to adapt to a broader range of market conditions, increasing their resilience and potential for consistent returns.
There are risks associated with investing in Nasdaq 100 Index stocks. First off, the majority of the Nasdaq 100 stocks are technology and growth-oriented businesses, making them vulnerable to risks unique to their industry, including disruptions in technology, shifts in consumer preferences, and increased competition. Second, due to their concentration in particular sectors, these stocks may be more volatile than those in more diversified indices. Furthermore, Nasdaq 100 stocks might be more susceptible to macroeconomic influences and market sentiment, which could result in wider price fluctuations.