Factbox: Nasdaq's 'Cubes' ETF reaps Nasdaq's big run

The QQQ exchange-traded fund, often called the "Cubes" or the "Qs," tracks the Nasdaq 100, the index of the biggest 100 non-financial companies listed on the Nasdaq and is a proxy for the much broader Nasdaq Composite Index. It currently has about $40 billion in assets.

Here is a look at how it got so big.

* Since its 1999 launch with fewer than $15 million in assets, the QQQ has grown 2,645-fold in assets, making it larger now than the entire U.S. ETF industry was then. It is the sixth-largest U.S.-listed ETF in the $2 trillion ETF market.

* The fund started as a side project for a handful of Nasdaq employees seeking to bring mom-and-pop investors into the dotcom boom, but it is now widely held by many large long-term investors, including the Canada Pension Plan Investment Board and Japan's Tokio Marine & Nichido Fire Insurance Co Ltd.

* QQQ continues to attract day traders with its strong liquidity, ranking seventh among all ETFs for its 60-day average trading volume. Its typical penny bid/ask spread was barely affected last year, when a single Middle Eastern sovereign fund pulled $10 billion out of the fund, according to John Jacobs, founding father of the QQQ and a former Nasdaq executive who retired in January.

* The fund tends to turn in more extreme performances on both the upside and the downside than Nasdaq composite, perhaps because it is composed of the influential stocks atop the broader index. Between the composite index's peak on March 10, 2000 and its trough on Oct. 10, 2002, the benchmark index fell 78.4 percent, while the QQQ declined 83.6 percent between its respective peak on March 24, 2000 and trough on Oct.8, 2002. In the long run up since their respective troughs through Thursday, the Cubes fund has gone up 454.2 percent and the composite index 356.2 percent.

* Shorting activity has come down quite a bit over the past few years, with an average daily quantity on loan of 11.1 million shares from the end of 2011 to this year - about a third of the average daily 32.9 million shares on loan during the period from the end of 2009 to 2011.

* Invesco PowerShares is now the QQQ's sponsor, a role it took over in 2007 from Nasdaq, which continues to license its Nasdaq-100 index for the fund's use. And while the fund was initially listed on the American Stock Exchange, it later moved to the Nasdaq Stock Market in 2004, at which point its ticker changed to "QQQQ." The ticker reverted back to "QQQ" in 2011 after a change in symbology practices, allowing Nasdaq to have tickers with fewer than four characters.

* The QQQ has become less of a tech fund and more of a mainstream large-cap fund over the years: Today about 40 percent of the ETF is in consumer discretionary, healthcare and consumer staples companies. But it remains top-heavy in tech, with Apple Inc its biggest holding, accounting for 14.5 percent of the fund by itself. Other top holdings are Microsoft Corp and Google Inc.

* The fund bigfoots the 14 other Nasdaq-related ETFs, accounting for 77 percent of the $52 billion they all hold together, according to ETF.com data. Even with its net expense ratio set at a low 0.2 percent of assets, it generates some $80 million in fees annually for its trustee the Bank of New York Mellon, Nasdaq and Invesco, which markets the fund and pays ALPS Distributors Inc, a flat fee each year to distribute it.

For a graphic of the Nasdaq Composite Index reaching its peak, please see: http://link.reuters.com/byg24w

(Reporting by Ashley Lau in New York; Editing by Linda Stern, David Gregorio and Nick Zieminski)