Exchange traded funds (ETFs) provide diversification and market exposure by tracking an underlying index at a low cost. The ETF market is dominated by US funds, with the US making up 73% of the global ETF market. Technology, consumer goods, and healthcare industries have been performing well recently for ETFs. The Powershares QQQ Trust Series 1 ETF primarily tracks US technology and communications companies and has achieved strong returns with a low expense ratio but also carries risks from its sector and company concentration.

1. EXCHANGE TRADED FUNDS
Group 18:
Andy Voong,
Mengyuan Tang,
Hossein Goudarzi

2. • Tracks with an underlying index
• Common stock
• High Daily Liquidity
• Low Fees

3. • Diversification
• Market Exposure (Track with an Index)
• No minimum investment (usually)
• Trade flexibility
• Ideal for non-institutional investors

4. 73%
16%
8%
3%
0 10 20 30 40 50 60 70 80
United States
Europe
Africa and Asia-Pacific
Other Americas
Global ETF Market Distribution (%)

5. 0
0.5
1
1.5
2
2.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
US Net ETF Assets (USD, Trillions)
1411 ETFs
Almost $2Trillion

6. WHAT INDUSTRIES ARE PERFORMING
WELL RIGHT NOW?

7. Sector 1 Day 1 Week 1 Month 3 Month 6 Month 1 Year YTD
Technology -0.3 -1.4 4.6 1.7 0.6 5.9 6.3
Healthcare -0.9 -2.8 2 -9.4 -7.3 4.2 2.9
Consumer Goods -1 -2.8 1 -1.6 -4.4 3.2 2.9
Services -0.8 -1.8 3 -1.7 -2.9 3.7 0.4
Industrial Goods -1.2 -1.8 4 -0.7 -5.2 -0.4 -0.3
Financial -1.3 -1.6 2.9 -4.7 -6.1 -2 -3.2
Utilities -1.1 -2.9 -3.1 -5.1 -6.7 -6.5 -9.1
Conglomerates -2.3 -4.7 -2.6 -3.1 -12.9 -17.9 -16.3
Basic Materials -2 -5.9 -6.6 -9.3 -25.3 -27.8 -21.2

8. Performs Well
• Technology
• Consumer Goods
Cost Effective
US

9. Powershares
QQQ Trust
Series 1

10. Total Return (%) 1m 3m YTD 1yr 3yr 5yr
Average 7.88 -0.33 8.2 10.98 23.15 18.49
XNDX 6.64 3.30 11.04 13.23 23.29 17.84
QQQ US 6.61 3.21 10.77 12.99 23.04 17.58
IBB US 7.14 -10.33 8.99 13.96 36.63 30.63
QQQE US 3.27 -1.03 2.63 6.23 21.88 -
QQXT US 2.01 -3.73 3.04 6.98 20.92 16.00
PNQI US 7.66 4.31 18.65 19.13 27.04 17.82
QQEW US 3.15 -1.16 2.24 5.79 21.54 14.57
SPY US 3.35 0.59 2.72 4.40 16.98 13.62

11. Ticker Expense Ratio (%)
Average Bid Ask
Spread (%) Premium (%)
52 Week Average
Premium (%)
Average 0.42 0.08 -0.01 0.00
QQQ 0.20 0.01 -0.03 0.00
IBB 0.48 0.10 -0.08 0.01
QQQE 0.35 0.06 -0.08 0.00
QQXT 0.60 0.20 0.02 0.04
PNQI 0.60 0.16 0.05 -0.03
QQEW 0.60 0.06 0.07 0.01
SPY 0.09 0.00 0.01 0.00

12. Communications
34%
Consumer,
Cyclical
9%
Consumer, Non-cyclical
19%
Industrial
1%
Technology
37%
QQQ US Equity Market Breakdown

13. 12.86
8
5.524.62
4.38
4.04
3.01
2.97
2.71
2.45 TOP 10 HOLDINGS (%)
APPLE INC
MICROSOFT CORP
AMAZON.COM INC
ALPHABET INC-CL C
FACEBOOK INC-A
ALPHABET INC-CL A
INTEL CORP
GILEAD SCIENCES INC
CISCO SYSTEMS INC
COMCAST CORP-CLASS A

15. -1
0
1
2
3
4
5
6
MONTHLY AVERAGE TOTAL RETURN
(%)
QQQ US Equity Average
Total Return (%)

17. RISKS?

18. • Sector Concentration (Technology, Communications and
Consumer Goods)
• Company Concentration (Apple, Microsoft, Amazon)
• Macro Risk (interest rate change?)
• Currency Risk
RISK

19. CURRENCY RISK
If Interest
rates
USD will appreciate

21. BUT… WHAT ABOUT
TECHNICAL ANALYSIS?

22. 85
90
95
100
105
110
115
120
MA
QQQ US Equity 20 Day 50 Day 100 Day 200 Day

23. 0
10
20
30
40
50
60
70
80
90
Nov
2014
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
RSI
QQQ US Equity RSI
QQQ US Equity Overbought Line
QQQ US Equity Oversold Line

24. -2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Nov
2014
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
MACD
QQQ US Equity MACD Difference
QQQ US Equity MACD
QQQ US Equity MACD Signal

25. 110
115
120
125
130
135
140
Oct 2015 Dec 2015 Jan 2016 Mar 2016 May 2016 Jun 2016 Aug 2016 Oct 2016 Nov 2016
Monte Carlo Simulation

26. 85
90
95
100
105
110
115
120
Nov
2014
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
Bollinger Bands
20 Day Moving Average Upper Bollinger
Lower Bollinger QQQ US Equity

27. 40
50
60
70
80
90
100
110
120
Nov 2010 Nov 2011 Nov 2012 Nov 2013 Nov 2014 Nov 2015
Fibonacci Retracement
115.02
99.68

28. Recommendations:
52 Week High: 115.47
52 Week Low: 84.74
Support Level 1: 100.0026
Support Level 2: 99.6824
Resistance Level 1: 115.02
Resistance Level 2: 115.47
Target Buy Price: between 100 and 110
Target Sell Price: 130

29. TO CONCLUDE…

31. Strong
Returns
Diversification
Low
Tracking
Error
Low
Expense
Ratio