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ETFs to Play Nasdaq's Fastest Start Since 2019

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The Nasdaq composite has witnessed its fastest start to a new year since 2019, per investors.com. The Nasdaq composite is up 6.4% so far this year, amid talks of a soft landing and the Federal Reserve slowing the pace of rate hikes this year and probably starting rate cuts from next year. Back in 2019, the Nasdaq jumped 7.9% to start the year.

The Nasdaq is tech-heavy. Other growth sectors also have considerable weights in the index. U.S. tech stocks hit rough weather last year as surging inflation weighed on their lofty valuations caused by massive policy easing during the peak of the COVID-19 outbreak. Although tech stocks tried to recoup losses several times, investors remained cautious about betting big on growth stocks.

Rising rate worries dampened the appeal of the stocks that rely on easy borrowing for superior growth. Hence, shares of high-growth technology companies remained in a tight spot. However, with rates falling this year, technology and growth sectors started outperforming.

Plus, Silicon Valley layoffs have been intense. Amazon, Meta, Alphabet, Twitter, Salesforce – most of the tech giants have been on layoff spree.  Video-sharing outlet Vimeo said it was axing 11% of its workforce. The digital fashion platform Stitch Fix said it planned to cut 20% of its salaried staff, after having slashed 15% of its salaried staff last year. Such layoffs and cost reduction may boost profitability of the tech companies. This is another reason for the recent tech rally.

What Lies Ahead?

The investors.com article revealed that the Nasdaq is still close to bear lows at start of 2023 — as in 2019. Hence, the index doesn’t have to run much to record a solid annual performance. However, such a recovery is possible only if there is no unexpected event that could crush the broader market.

Against this backdrop, below we highlight a few Nasdaq ETFs so that interested investors can play the ongoing rally. 

ETFs in Focus

Invesco QQQ Trust (QQQ - Free Report)

The underlying Nasdaq-100 Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. Information Technology (49.4%) and Communication Services (16.85%) take the top two spots in the fund. The fund is heavy on Microsoft (11.87%) and Apple (11.75%). The fund charges 20 bps in 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. Information Technology (49.4%) and Communication Services (16.85%) take the top two spots in the fund. The fund charges 15 bps in fees.

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

The underlying NASDAQ Next Generation 100 Index comprises of securities of the next generation of Nasdaq-listed non-financial companies; that is, the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index. Information technology (34.01%), Healthcare (25.55%), Communication Services (11.55%) and Consumer Discretionary (11.19%) take the double-digit weights in the fund. The fund charges 15 bps in fees.

Fidelity Nasdaq Composite Index ETF (ONEQ - Free Report)

The underlying NASDAQ Composite TR USD is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The fund is heavy on Apple (12.14%) and Microsoft (10.50%). The fund charges 21 bps in fees.

Simplify Nasdaq 100 PLUS Convexity ETF (QQC - Free Report)

The fund seeks to provide capital appreciation by tracking a commonly held basket of large cap U.S. growth stocks while aiming to boost performance during extreme market moves up or down via a systematic options overlay. The net expense ratio is 0.44%.  


 

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