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XQQ vs QQC.F - Bankruptcy
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Apr 5th, 2021 12:37 pm
#1
curiousgeorge1000 [OP] Jr. Member Oct 21, 2017 199 posts 19 upvotes
Apr 5th, 2021 12:37 pm
XQQ vs QQC.F - Bankruptcy
If you are investing for the long term say 30yrs, is XQQ a better hold or QQC.F? XQQ (iShares NASDAQ 100 Index ETF (CAD-Hedged) -MER 0.39% QQC.F (Invesco QQQ Index ETF - CAD hedged) -MER 0.26% IVZ Invesco Company -IVZ stock (company) is very rocky compared to XQQ. Lots of ups and downs. -Still hasn't recovered from the huge drop in Jan 19, 2018 (38.13). April 5, 2021 is at 26.18. -In March 2020 amid a major stock market crash triggered by the COVID-19 pandemic, Invesco Mortgage Capital Inc., a branch handling Real Estate Investment Trusts, announced they were unable to cover margin calls due to dramatic devaluations and investors selling shares. The company also announced they would delay dividend payments. -Founded in 1935 BLK BlackRock Company -Stock (company) is way less rocky than IVZ -Jan 19, 2018: 590. April 5, 2021 787.70. -Founded in 1988 QQC.F has a lower MER but is XQQ a better long term hold of say 30 years even with a higher MER? What are the chances of Invesco going bankrupt or QQC.F being delisted/liquidated compared to Blackrock? Even though BlackRock is a way bigger company, the same can be said that nobody thought Lehman could go bankrupt. Do you not lose any money in an ETF when the ETF company goes bankrupt (eg. Invesco) because the contracts to manage them would transfer to other companies and the underlying asses are unaffected? If you are not affected by the bankruptcy, are you still affected by the delisting/liquidation if the ETF is at an all time low and you are forced to sell before you can buy the new company's ETF or does the ETF get transferred to the new ETF company without needing you to sell/buy?
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8 replies Apr 5th, 2021 5:54 pm
#2
Shaun80 Sr. Member Oct 21, 2016 946 posts 718 upvotes
Apr 5th, 2021 5:54 pm
curiousgeorge1000 wrote: ↑If you are investing for the long term say 30yrs, is XQQ a better hold or QQC.F? XQQ (iShares NASDAQ 100 Index ETF (CAD-Hedged) -MER 0.39% QQC.F (Invesco QQQ Index ETF - CAD hedged) -MER 0.26% IVZ Invesco Company -IVZ stock (company) is very rocky compared to XQQ. Lots of ups and downs. -Still hasn't recovered from the huge drop in Jan 19, 2018 (38.13). April 5, 2021 is at 26.18. -In March 2020 amid a major stock market crash triggered by the COVID-19 pandemic, Invesco Mortgage Capital Inc., a branch handling Real Estate Investment Trusts, announced they were unable to cover margin calls due to dramatic devaluations and investors selling shares. The company also announced they would delay dividend payments. -Founded in 1935 BLK BlackRock Company -Stock (company) is way less rocky than IVZ -Jan 19, 2018: 590. April 5, 2021 787.70. -Founded in 1988 QQC.F has a lower MER but is XQQ a better long term hold of say 30 years even with a higher MER? What are the chances of Invesco going bankrupt or QQC.F being delisted/liquidated compared to Blackrock? Even though BlackRock is a way bigger company, the same can be said that nobody thought Lehman could go bankrupt. Do you not lose any money in an ETF when the ETF company goes bankrupt (eg. Invesco) because the contracts to manage them would transfer to other companies and the underlying asses are unaffected? If you are not affected by the bankruptcy, are you still affected by the delisting/liquidation if the ETF is at an all time low and you are forced to sell before you can buy the new company's ETF or does the ETF get transferred to the new ETF company without needing you to sell/buy?
QQQM in usd preferably in your rrsp is the best option. Lowest mer and no witholding tax on the dividend (paltry as it is).
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Apr 5th, 2021 8:29 pm
#3
winner2000 Deal Addict Feb 7, 2006 2885 posts 2699 upvotes
Apr 5th, 2021 8:29 pm
Honestly you should 'worry' about the ETF you're interested in, not the financial health of Blackrock or Invesco. Both are strong companies, and the likelihood of either of them going "bankrupt" is virtually zero. +1
curiousgeorge1000 wrote: ↑ If you are investing for the long term say 30yrs, is XQQ a better hold or QQC.F? XQQ (iShares NASDAQ 100 Index ETF (CAD-Hedged) -MER 0.39% QQC.F (Invesco QQQ Index ETF - CAD hedged) -MER 0.26% QQC.F has a lower MER but is XQQ a better long term hold of say 30 years even with a higher MER? What are the chances of Invesco going bankrupt or QQC.F being delisted/liquidated compared to Blackrock? Even though BlackRock is a way bigger company, the same can be said that nobody thought Lehman could go bankrupt. Do you not lose any money in an ETF when the ETF company goes bankrupt (eg. Invesco) because the contracts to manage them would transfer to other companies and the underlying asses are unaffected? If you are not affected by the bankruptcy, are you still affected by the delisting/liquidation if the ETF is at an all time low and you are forced to sell before you can buy the new company's ETF or does the ETF get transferred to the new ETF company without needing you to sell/buy?
BMO ZQQ CAD Hedged You can add ZQQ to your etf list if you are looking for CAD-hedged. If you are that concerned over solvency, you could always split your Nasdaq holdings among different firms. Additionally, several major Canadian FI's offer Nasdaq Index Funds (albeit with higher MER's)... Just a few examples below but there could be more... The typical pattern has been for FI's or investment funds to be sold or "wound up" (not dissolved because of insolvency). Insolvency is always a remote possibility with major FI's but generally a lower risk than the actual investment. Having done this a long time, however, I never, "say never". Scotia Nasdaq Index Fund TD Nasdaq Index Fund CIBC Nasdaq Index Fund +1
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Apr 5th, 2021 10:48 pm
#5
curiousgeorge1000 [OP] Jr. Member Oct 21, 2017 199 posts 19 upvotes
Apr 5th, 2021 10:48 pm
DealRNothing wrote: ↑ The typical pattern has been for FI's or investment funds to be sold or "wound up" (not dissolved because of insolvency). Insolvency is always a remote possibility with major FI's but generally a lower risk than the actual investment. Having done this a long time, however, I never, "say never".
Does sold or 'wound up' mean another firm taking over the fund? If that is the case, if nasdaq is down 30%, does this mean you are not forced to sell and you can continue holding the fund?
curiousgeorge1000 wrote: ↑ Does sold or 'wound up' mean another firm taking over the fund? If that is the case, if nasdaq is down 30%, does this mean you are not forced to sell and you can continue holding the fund?
1) A sale of the investment portfolio to a competitor would typically mean the "fund" would continue (but renamed of course) without "realizing" any Capital Gains/Losses. Cost base would remain unchanged but your number of shares/unit values might change. 2) A "windup" of a fund by an FI would mean investors would receive NAV (Net Asset Value) at the date/time of windup (forced sale). In this scenario, the fund would liquidate and return capital (NAV/Market value_up or down) to shareholders upon the windup date. The typical scenario is/has been 1) +1
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Apr 5th, 2021 11:40 pm
#7
curiousgeorge1000 [OP] Jr. Member Oct 21, 2017 199 posts 19 upvotes
Apr 5th, 2021 11:40 pm
DealRNothing wrote: ↑ 1) A sale of the investment portfolio to a competitor would typically mean the "fund" would continue (but renamed of course) without "realizing" any Capital Gains/Losses. Cost base would remain unchanged but your number of shares/unit values might change. 2) A "windup" of a fund by an FI would mean investors would receive NAV (Net Asset Value) at the date/time of windup (forced sale). In this scenario, the fund would liquidate and return capital (NAV/Market value_up or down) to shareholders upon the windup date. The typical scenario is/has been 1)
Thank you for the very informative post. ETF Closures https://www.etf.com/etf-watch-tables/etf-closures If an ETF is not attracting enough assets, the ETF may get delisted (ETF closure). How does one tell if an ETF is attracting enough assets or not?
curiousgeorge1000 wrote: ↑ Thank you for the very informative post. ETF Closures https://www.etf.com/etf-watch-tables/etf-closures If an ETF is not attracting enough assets, the ETF may get delisted (ETF closure). How does one tell if an ETF is attracting enough assets or not?
A Nasdaq index tracking investment is likely to have larger capitalization because it is a "mainstream" investment holding some of the largest companies in the world by market cap. Investors own Nasdaq like the S&P500, DJIA, TSX, etc. FI's that try to produce "niche" / or complicated methodology funds generally attract the least amount of investors and are generally at higher risk of windup. The number you will want to look at is the Market Capitalization of the etf/fund. Generally, the higher, the less risk (providing a mainly "Long" fund mandate). Funds $500M+ Market Cap (in Canada) are usually considered the lowest risk, however, there are several MF's / etfs that are much lower. XQQ Market Cap_ $1.4B ZQQ Market Cap_$1.35B QQQ (US) Market Cap_$150.5B (remember US market - makes sense) QQC.F_Market Cap_$367M HXQ Market Cap_$233M XIT (CDN Tech)_$450M +1
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Apr 6th, 2021 12:19 am
#9
curiousgeorge1000 [OP] Jr. Member Oct 21, 2017 199 posts 19 upvotes
Apr 6th, 2021 12:19 am
Appreciate the good info! Thanks!
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