The PowerShares QQQ (QQQ) is based on the Nasdaq-100 Index, which measures the 100 largest non-financial stocks currently trading on the Nasdaq exchange. Whether by design or practical experience, this index and its affiliated ETF have always been associated with the technology sector.

The truth is that many technology companies have historically picked the Nasdaq exchange as their home base. Because QQQ culls its underlying holdings from this pool, there is a natural tendency to be overweight the cream of the crop in the technology field.

However, when you dig beneath the surface, this unique group of stocks actually offers far more than just a one-dimensional focus. Over the years, QQQ has evolved to include a broader depth of sector dispersion as market dynamics, M&A activity, and other growing trends have taken hold.

Understanding its nuances can unveil attractive characteristics for investors looking to capitalize on a diversified array of top growth stocks.

Today’s QQQ

The current sector makeup of QQQ is 55% technology, 20% consumer discretionary, 14% healthcare, 7% consumer staples, and a small fraction in industrials. Top holdings in this ETF include: Apple Inc (AAPL), Microsoft Corp (MSFT), and Amazon.com Inc (AMZN). Together these three stocks make up over 25% of the total portfolio, with AAPL garnering 12.65% of the overall weight.

Fun fact: According to Wikipedia, AAPL is one of only four original components of the NASDAQ-100 Index since its debut in 1985. The other three are Costco Wholesale Corp (COST), Intel Corp (INTC), and PACCAR Inc (PCAR).

Many of the top stocks in QQQ can be found in specialized sector funds such as the Technology Select Sector SPDR (XLK). However, the real value in this index is its diversification into other realms such as biotechnology, social media, e-commerce, and other consumer-driven themes. Health care in particular has been a strong momentum area of the market over the last several years and continues to be a performance differentiator for QQQ.