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Nasdaq Outperforms Major Indices in 2020: ETFs to Gain

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The year 2020 has been majorly dominated by the coronavirus pandemic. The tech-heavy Nasdaq Composite index, however, stood strong against the virus attack and managed to gain around 43.2% in 2020. Investors have been increasingly observed to give more attention to big tech names such as Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) and Facebook (FB - Free Report) considering the increasing shift to digitization amid the coronavirus outbreak.  However, other major stock market indices like Dow Jones Industrial Average and the S&P 500 index have risen around 6.3% and 15.4%, respectively, in the same period.

Going on, among sectors, technology has been the best performer in 2020. In fact, the S&P 500 Information Technology climbed 41.5% when compared to the gains of the S&P 500 Index in 2020.

It is widely believed that the major technology companies’ resilience to the coronavirus crisis supported the tech-heavy index. Major technology stocks like Facebook, Microsoft (MSFT), Apple, Netflix (NFLX) and Alphabet (GOOGL) are positive in 2020. Moreover, Amazon has supported the Nasdaq by gaining more than 77% in the year. Also, Apple is on track to deliver the second consecutive annual gain of above 80%.

Amid the coronavirus pandemic, rising work-from-home and online-shopping trend, increasing digital payments, growing video streaming and soaring video game sales have gained huge popularity and become the ‘new normal’ trends.  Given the aggravating coronavirus outbreak in the United States, it is being believed that Internet will continue to be a major requirement in daily lives.

The pandemic has also provided a push to the e-commerce industry as people continue to prefer staying indoors and shop online for all essentials, especially food items.

Cloud computing has emerged as a key technology and is keeping up with the growing work-from-home trend in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and helping employees across the world collaborate while working. The work-from-home model has bumped up sales of PCs, laptops and other kind of computer peripherals. More and more people are spending time at their homes, in line with the social-distancing guidelines.

Along with increased interest in online shopping, customers are resorting to digital payments to clear bills. At the same time, merchants and utility providers are increasingly advocating the same.

The video game industry is seeing a boom as people are increasingly playing video games for some in-house entertainment, while maintaining social distancing amid the pandemic. Moreover, the boom in the video gaming space might remain in the post-pandemic era as well.

ETFs to Gain

Investors seeking to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the afore-mentioned trends stay:

ProShares UltraPro QQQ (TQQQ - Free Report) — up 108.5%

For a more bullish approach, TQQQ could be an excellent choice. It tracks the Nasdaq-100 Index but offers thrice the returns of the daily performance, with an expense ratio of 95 basis points (bps). The fund has managed AUM of $9.27 billion. It trades in three-months volumes of nearly 27.6 million shares on average.

ProShares Ultra QQQ (QLD - Free Report) — up 88.2%

Investors seeking to make big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance. The fund has AUM of $3.80 billion, while it trades in three-months volumes of nearly 1.9 million shares on average. It charges 95 bps in fees and expenses (read: Ride the Relentless Big Tech Rally With These ETFs).

Invesco QQQ (QQQ - Free Report) — up 47.1% year-to-date

This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $150.79 billion and average three-months trading volume of around 35.9 million shares. It charges investors 20 bps in annual fees. The fund sports a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: 6 Best Active ETFs of 2020).

Fidelity Nasdaq Composite Index Tracking Stock (ONEQ - Free Report) — up 42.8%

This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,032 stocks. It has AUM of $3.60 billion. It trades in average three-months volume of 35,000 shares. The expense ratio comes is 0.21%. The product carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: Nasdaq's Best Third Quarter in 10 Years: Best ETFs & Stocks).

First Trust NASDAQ-100 Equal Weighted ETF (QQEW - Free Report) — up 35.4%

Holding 103 stocks, this fund replicates as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Equal Weighted Index. It has amassed $1.16 billion in its asset base, while it trades in three-months volumes of nearly 89,000 shares on average. QQEW carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: Nasdaq in Correction: One Solid Reason to Buy the Dip in ETFs).

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