The Nasdaq inventory change accommodates a few of the most tasty investments on the inventory market, together with rapidly rising tech names. Buyers can personal all of them by buying a Nasdaq index fund, making it straightforward to personal such bellwethers because the Magnificent 7 shares. However quite a lot of such funds exist, and also you need to watch out about what precisely you’re shopping for.
Listed here are some high Nasdaq exchange-traded funds (ETFs) and key issues that you must search for.
6 high Nasdaq ETFs
The funds beneath make investments primarily within the Nasdaq 100 index, which incorporates the biggest 100 non-financial shares buying and selling on the Nasdaq inventory change — firms comparable to Apple, Amazon, Microsoft, Alphabet, Meta Platforms, Netflix and plenty of extra. Don’t get that confused with the Nasdaq Composite, an index which incorporates all shares buying and selling on that change.
Different ETFs beneath embrace leveraged funds and brief funds. Leveraged funds permit traders to probably make a bigger return than what’s delivered by the index itself. Brief funds let traders wager in opposition to the index, permitting them to revenue when the index falls. (Knowledge as of April 10, 2025.)
Invesco QQQ Belief (QQQ)
This fund goals to imitate the Nasdaq 100 index, although it’s truly dramatically outperformed that index.
- Annual returns (5 years): 19.1 %
- Expense ratio: 0.20 %
Invesco Nasdaq 100 ETF (QQQM)
This fund — additionally from Invesco — tracks the Nasdaq 100, too, but it surely does it at even decrease value. The fund has not existed for 5 years, however its three-year returns are corresponding to these of the QQQ ETF.
- Annual returns (3 years): 10.9 %
- Expense ratio: 0.15 %
ProShares UltraPro QQQ (TQQQ)
This leveraged fund makes use of derivatives to amp up the return of the Nasdaq 100, and it targets a each day return of thrice that index. It additionally expenses a more healthy expense ratio for that profit.
- Annual returns (5 years): 32 %
- Expense ratio: 0.84 %
Direxion Nasdaq-100 Equal Weighted ETF (QQQE)
This fund holds an equal weighting within the Nasdaq 100 shares moderately than the everyday weighting that’s closely skewed to the biggest tech shares.
- Annual returns (5 years): 13.1 %
- Expense ratio: 0.35 %
ProShares UltraPro Brief QQQ (SQQQ)
This fund goes up because the Nasdaq 100 goes down, permitting you to short-sell the index in a handy fund.
- Annual returns (5 years): -54.1 %
- Expense ratio: 0.95 %
Constancy Nasdaq Composite Index ETF (ONEQ)
This fairly priced fund tracks the Nasdaq Composite (not the Nasdaq 100), so traders get broader publicity to that bigger index and fewer focus within the greatest tech shares.
- Annual returns (5 years): 17.1 %
- Expense ratio: 0.21 %
Dangers of ETFs
ETFs may be a sexy solution to make investments out there, permitting you to get the return of a selected index, however they nonetheless have drawbacks.
- Volatility: Identical to particular person shares, a inventory ETF may be extremely risky, although it tends to be much less so than single shares. You’ll want to grasp that shares can go anyplace within the brief time period and also you’ll have to carry on for years to benefit from the robust long-term returns.
- Monitoring threat: A fund monitoring a selected index could not precisely ship the returns of that index — that’s referred to as monitoring threat. Within the case of some funds above, that’s truly labored in traders’ favor, for the reason that funds have dramatically outpaced their index. However it may simply as simply work within the different route, with the fund unable to trace its goal.
- Structural prices: Leveraged and brief funds have further prices by their very nature, as their spinoff positions expire and must be re-established frequently. These prices result in a drag on their returns over time, even when they carry out effectively.
The Nasdaq 100 is a well-liked inventory index, however traders produce other common selections, particularly if they need broader diversification than simply the biggest tech shares. The preferred index is the Commonplace & Poor’s 500, which incorporates shares throughout each main business. Funds from the S&P 500 and the Nasdaq 100 commonly rank among the many greatest ETFs, providing excessive returns and low value.
Backside line
ETFs can mean you can put money into the Nasdaq inventory index rapidly and simply, providing a simple means to harness the robust returns out there there. However you’ll want to perceive precisely what you’re shopping for and whether or not it matches your funding aims and threat tolerance. Work with among the best brokers for ETF investing for a robust vary of options that may enable you to succeed.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing determination. As well as, traders are suggested that previous funding product efficiency isn’t any assure of future value appreciation.
