Every December the Nasdaq-100 Reshuffles. QQQ Holders Feel It Even If They Never Trade

According to Nasdaq, the Nasdaq-100 “is reconstituted each year in December.” That matters to anyone who holds Invesco QQQ Trust (NASDAQ:QQQ), Invesco NASDAQ 100 ETF (NASDAQ:QQQM), or ProShares UltraPro QQQ (NASDAQ:TQQQ).

When the index changes its lineup, your fund’s holdings change that week whether you do anything or not. Nasdaq says that as of December 2025, the index supported more than 200 tracking products with over $600 billion in assets under management globally, including QQQ.

How the Nasdaq-100 Reshuffle Actually Works

The Nasdaq-100 holds 100 of the largest non-financial companies. They are listed on the Nasdaq Stock Market and ranked by market capitalization (share price times shares outstanding). Rankings, in other words, come down to company size.

Once a year, after the close of trading on the third Friday in December, the index is rebalanced. Companies can be added or dropped at that point. This annual lineup change is the reconstitution.

Four times a year, in March, June, September and December, again after the close on the third Friday, the index is reweighted. That means each company’s share of the index gets reset. Invesco’s prospectus highlights that no security may exceed 15% of the index at the annual weight adjustment, and no issuer may exceed 24% at each quarterly adjustment.

The prospectus calls the method “modified market capitalization-weighted,” a hybrid between equal weighting and pure size weighting. Bigger companies get bigger weights, but the caps keep any one company from growing too large.

Changes can also happen between scheduled dates. A special reweighting can occur if weight limits are broken, and a company can be removed outside the schedule if it becomes ineligible. Under the fast entry rule, Invesco’s prospectus says a newly eligible company whose market cap ranks within the top 40 constituents can be added early. That can temporarily push the index above 100 members.

Six In, Six Out: Nasdaq’s December Lineup Change

Nasdaq announced on December 12, 2025, that six companies would join the index, effective before the market opened on Monday, December 22, 2025. Nasdaq named Alnylam Pharmaceuticals, Ferrovial, Insmed, Monolithic Power Systems, Seagate Technology and Western Digital.

According to Nasdaq, the same reconstitution removed six companies: Biogen, CDW, GlobalFoundries, Lululemon, ON Semiconductor and The Trade Desk.

Why Holders Feel It Even If They Never Trade

The simplest effect is that your fund changes its holdings on your behalf. QQQM’s and TQQQ’s SEC holdings reports as of August 31, 2026 both list names added last December, including Alnylam Pharmaceuticals, Seagate Technology and Western Digital.

Next comes portfolio turnover, which roughly measures how much of a portfolio got replaced during the year. Invesco reports that QQQ’s portfolio turnover rate was 7.98% of the average value of its portfolio during its most recent fiscal year. The prospectus notes that higher turnover can mean higher transaction costs and higher taxes when shares are held in a taxable account, though an index fund like QQQ trades mainly when its index changes, so turnover stays low.

Each fund feels the reshuffle differently. QQQ and QQQM track the same index, so their lineups move together, while TQQQ is a leveraged ETF, a fund that uses derivatives to magnify the index’s moves. Its SEC holdings report as of August 31, 2026 shows Nasdaq-100 stocks alongside derivative contracts, Treasury bills, and cash-like holdings. Index changes reach TQQQ too, mixed in with its leverage. It’s built for short-term trading, which makes it a poor fit for a buy-and-hold plan.

The reshuffle also leaves concentration in place. The caps limit how big any one company can get, but the biggest names still carry the most weight. NVIDIA, Apple, and Microsoft were the three largest holdings in QQQM’s August 31, 2026 report.

What Reshuffle Week Means for Fund Holders

The fund handles the buying and selling around the reshuffle on behalf of its shareholders, so if you hold QQQ in a taxable account, check your year-end tax forms like you would any other year.

Nasdaq announces its annual changes in December, before they take effect, so the new lineup is visible ahead of time. That announcement tells you which companies your fund is about to add and drop.

The December reshuffle is the index doing its job and keeping its lineup in line with its own rules. For a long-term QQQ or QQQM holder, it’s a good time to look at what you own while the fund handles the trading.

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