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7 Nasdaq ETFs to Play the Index's Winning Momentum

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The year 2020 can easily be fully attributed to the Nasdaq as the tech-heavy index gained jumped about 44%. This made 2020 the best year for the index since 2009’s turnaround after surviving the Global Financial Crisis, per an article published on barrons.com. However, the momentum continues even in the New Year with the index closing above 13,000 for the first time on Jan 7.

The monstrous gains in the index were posted by the likes of Xunlei Limited (up 48.1% on Jan 7), Stratasys Ltd. (SSYS - Free Report) (up 38.97% on Jan 7) and Arcturus Therapeutics Holdings Inc. (ARCT - Free Report) (up 35.61% on Jan 7). Apple (AAPL) (up 3.4% on Jan 7) also helped to drive the index on Jan 7.

Investors should note that after diving into a bear market in March, Wall Street made a strong comeback from April on unprecedented stimulus both from the Fed and the government. The easing of lockdown measures in the United States and reopening of global economies have resulted in an uptick in activities that has bolstered investors’ confidence.

The latest bouts of data indicate that the economy is recovering decently from the coronavirus-related slump and that the worst is probably over. The Institute for Supply Management (ISM) recently reported that economic growth in the services sector logged growth for the seventh successive month.

The tech-heavy Nasdaq index outdid others in the peak of the pandemic due to greater rallies in the technology sector or socially-distant stocks, and continues to rally even after the reopening of economies.

What Lies Ahead?

Notably, the index may log double-digit gains even in 2021 as there is a new strain of coronavirus, which can charge up the tech space all over again. However, everything depends on the efficacy of the recently rolled out vaccines. If the vaccines fail to restrain the new strain of virus, fears may flare up and the Nasdaq will again rule.

The touch of technology in business and health communications will be in fine-fettle in 2021 as uncertainties prevail. Moreover, with the global economy striving to bounce back from the virus-led slump, corporate and social efforts to save on the cost structure will be a priority. Travels will likely be less in the post-COVID world and e-payments will gain precedence.

Biotechnology is another great area with genomics grabbing the limelight. These two segments – tech and biotech – should continue to march ahead in 2021 with or without virus scare. Since the Nasdaq has great exposure to those two specific segments, 2021 has high chances of being a rewarding year for the index.

Against this backdrop, one can play the momentum with the below-mentioned ETFs.

ETFs in Focus

Invesco QQQ (QQQ - Free Report)

This ETF provides exposure to about 100 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 $149.8 billion. It charges investors 20 bps in annual fees.

Invesco NASDAQ 100 ETF (QQQM - Free Report)

The underlying NASDAQ-100 Index includes securities of 100 of the largest domestic and international nonfinancial companies listed on Nasdaq. The expense ratio of the fund is 0.15%. The fund, which hit the market in Oct 2020, has amassed about $354.1 million. The fund is the lowest-cost version of QQQ, making it suitable for longer-term buy-and-hold investors.

Invesco NASDAQ Next Gen 100 ETF (QQQJ - Free Report)

The fund is based on the NASDAQ Next Generation 100 Index. The fund will invest at least 90% of its total assets in the securities that comprise the Index by investing in the 101st to the 200th largest companies on the NASDAQ. As a result, the portfolio may have a tilt toward mid-cap stocks. The Index is made up of securities of the next generation of Nasdaq-listed non-financial companies. It means the index looks to mimic the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index. The fund charges 15 bps in fees and has amassed about $646.2 million in assets.

First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report)

Holding about 100 stocks, this fund provides equal exposure to the stocks of the Nasdaq-100 Index. It has amassed $1.19 billion in its asset base. It charges 60 bps in annual fees.

Fidelity Nasdaq Composite Index Tracking Stock (ONEQ - Free Report)

This ETF tracks the Nasdaq Composite Index, holding a broad basket of 990 stocks. It has AUM of $3.60 billion. The expense ratio comes is 0.21%.

ProShares Ultra QQQ (QLD - Free Report)

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 $3.82 billion and charges 95 bps in fees and expenses.

ProShares UltraPro QQQ (TQQQ - Free Report)

For a more bullish approach, TQQQ could be an excellent choice. It also tracks the NASDAQ-100 Index but offers thrice the returns of the daily performance, with the same expense ratio of QLD. The fund has managed AUM of $9.44 billion.

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