[Nasdaq Story] Checking QQQ Fund Flows in the Nasdaq 25,000 Era: Pressure from 4.6% Treasury Yields and Supply-Demand Changes in Passive ETFs

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Core Summary

With the Nasdaq index reaching the 25,870 level, the Assets Under Management (AUM) of the QQQ ETF, a core passive product, stands at approximately $468 billion.

However, a polarization in fund flows has recently been observed, with some funds flowing out of core index funds and shifting into specific thematic ETFs.

The US 10-year Treasury yield (US10Y) has risen to the 4.6% range, increasing the valuation discount rate burden on the stock market.

Nevertheless, the VIX remains around 17.8, suggesting that the market's vigilance against volatility has somewhat relaxed.

Concerns over delayed monetization compared to the massive capital expenditures (CAPEX) in the AI value chain have emerged as a key variable for QQQ's supply and demand.

According to Daily Stock's proprietary Fear & Greed Index, the Nasdaq is currently recording a state of Greed (60.4).

Current Situation Summary

As of the intraday session on May 20, 2026 (provisional), the Nasdaq index recorded 25,870.71, exploring a continuous upward channel.

In contrast, the KOSPI is at 7,279.00 and the USD/KRW exchange rate is at 1,507.80, fully reflecting the interest rate and exchange rate pressures of the global macroeconomic environment.

The QQQ ETF, managed by Invesco and tracking the Nasdaq 100, still acts as a massive black hole for market funds.

Recently, however, amid sticky inflation and geopolitical tensions, the short-term fund flow volatility of this core ETF is growing.

The US 10-year Treasury yield (US10Y) jumped to 4.67%, testing market resistance near its 12-month high.

The Dollar Index (DXY) is also hovering around the 99 level, weighing the relative attractiveness of global liquidity remaining in risk assets.

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Financial Analysis

The fundamentals of big tech companies, which account for the highest weight in the QQQ ETF, still show immense Free Cash Flow (FCF) generation capabilities.

However, CAPEX executed at a scale of tens of billions of dollars annually to upgrade AI infrastructure may increase the fixed cost burden on future balance sheets.

If companies' cloud and software revenue growth rates fail to keep pace with capital expenditure, there are concerns that Return on Equity (ROE) could be impaired.

This is a factor that could limit the long-term shareholder return capacity (dividends and share buybacks) of the core stocks comprising the QQQ ETF.

Therefore, institutional fund inflows are expected to move in strict correlation with tangible AI monetization metrics proven by the companies.

Investors should closely verify whether B2B enterprise demand leads to margin defense during major corporate earnings announcements.

Valuation

Currently, the forward Price-to-Earnings (P/E) ratio of the Nasdaq 100 index is positioned in a significant premium zone, exceeding its 5-year average.

This is by no means low compared to the historical multiples of traditional S&P 500 growth stocks or the Philadelphia Semiconductor Index (SOX).

In particular, the US 10-year Treasury yield breaking past 4.6% is significantly narrowing the gap with the Earnings Yield, which is the expected return on stock investments.

This lowers the Equity Risk Premium (ERP) required when investing in stocks, acting as a strong hurdle that suppresses further multiple expansion of the index.

Ultimately, a structural valuation rerating of the QQQ ETF may be limited without macroeconomic environment improvements or dramatic Earnings Per Share (EPS) growth.

In an era of higher risk-free rates, it is difficult to justify premiums based on simple growth expectations alone.

Expert & Institutional Analysis

Market experts diagnose that the concentration in simple market-cap-weighted core indexes has somewhat eased in recent ETF fund flows.

Rebalancing is being spotted, centered around smart money, realizing some profits from QQQ and reallocating funds to dividend value stocks or Active ETFs.

This is interpreted as institutional judgment that at the Nasdaq 25,000 level, mechanical inflows of simple passive funds alone cannot guarantee a continued upward trend.

Additionally, voices warning against market complacency are growing louder, observing the VIX suppressed at 17.8 despite macro uncertainties.

Consequently, large investment institutions are observed to be adopting strictly data-driven "conditional weight adjustment" strategies.

In an era of 4.6% Treasury yields and a DXY of 99, fierce cherry-picking for stocks with solid cash-generating power, even among growth stocks, is inevitable.

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Risk Factors

The most significant potential risk is a scenario where the establishment of B2B and B2C monetization models—the ultimate destination of AI services—is delayed compared to aggressive market expectations.

In this case, the massively preemptive CAPEX could return squarely as depreciation pressure, causing an overall deterioration in profitability across the index.

Furthermore, the complete retreat of expectations for Federal Reserve (Fed) interest rate cuts due to the downward rigidity of inflation indicators is a major burden.

Prolonged high interest rates are a core factor that fatally discounts the future cash flow value of long-duration tech stocks.

On top of this, policy headwinds targeting top big tech stocks, such as global antitrust laws and AI data regulations, could serve as detonators at any time.

Investors must keep in mind the possibility that these multiple risks could suddenly lead to an explosive surge in the currently suppressed VIX.

Investment Perspective Summary

The Nasdaq market has currently entered a crossroads where the inertial strength of fundamentals and the pressure of macroeconomic indicators are in a tight tug-of-war.

Rather than blindly dollar-cost averaging into the QQQ ETF, a strategy that manages risk by simultaneously checking the trends of Treasury yields (US10Y) and the dollar (DXY) seems necessary.

According to Daily Stock's Fear & Greed Index, the KOSPI is currently Neutral (52.4), while the Nasdaq points to the Greed (60.4) zone.

The Nasdaq's greed index has somewhat cooled down compared to 1 month ago (68.6) or 3 months ago (69.7), but it is clear that optimism still prevails across the broader market.

If considering new entry, it may be rational to approach with conservative split purchases while verifying technical support levels and any rebounds in volatility indicators.

As the market's tone reacts sensitively to every single piece of macro data, having flexible and conditional response scenarios is crucial.

Investor Checkpoint Q&A

Q1. What is the current AUM and supply-demand trend of the QQQ ETF?

Currently, QQQ's AUM is at approximately $468 billion, firmly holding its position as the world's largest tech ETF.

However, coupled with recent fears of prolonged high interest rates, a trend has emerged where some passive funds are dispersing into thematic or defensive ETFs.

Q2. What is the impact on tech stocks when the US 10-year Treasury yield (US10Y) breaks 4.6%?

Treasury yields act as the baseline discount rate applied when converting a stock's future earnings into present value.

When this risk-free rate exceeds 4.6%, the current valuation attractiveness of Nasdaq companies relying on distant future growth relatively drops.

Q3. What are the current trends of the Fear & Greed Index for the Nasdaq and KOSPI?

As of May 20, 2026, the KOSPI is Neutral (52.4), and the Nasdaq is recording a state of Greed (60.4).

The KOSPI stepped down to Neutral from Greed (64.7) a week ago, and the Nasdaq is also slightly lower compared to 3 months ago (69.7), yet risk-on sentiment still remains.

Q4. Why is the VIX index low at 17.8 despite market uncertainties?

Despite the recent rise in Treasury yields, the VIX staying near 17.8 is because perceived volatility across the market hasn't significantly expanded.

Investors perceive the current macroeconomic pressure as a limited standoff rather than a trend-driven crash, so they are not stepping up aggressive downside defenses (options hedging).

Q5. What are the most important macro indicators to watch carefully when investing in QQQ moving forward?

First is whether the US 10-year Treasury yield (US10Y), which determines tech multiples, stabilizes downwards. Second is the Dollar Index (DXY), representing global liquidity.

Unless these two indicators turn downward, the upside of the index is highly likely to be capped unless big tech delivers overwhelming earnings surprises.

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[QQQ ETF and Core Macro Indicators Status]

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