Buy THE Big Tech ETF?

Higher interest rates mean falling tech stocks. Or at least that’s what we’ve been told.

If that’s true, the drop in the U.S. dollar and a more cautious Fed should push money into tech stocks, right?

Our proprietary Trackstar search data seems to think so.

The leveraged Nasdaq-100 ETF was financial pros’ #3 ETF search over the last month.

Clearly, they’re looking for some exposure.

But let’s take a step back and look at the mother of them all: the Invesco QQQ ETF (QQQ).

Key Facts About QQQ

• Net assets: $172.6 billion
• 12-month trailing yield: 0.69%
• Inception: March 10, 1999
• Expense ratio: 0.2%
• Number of holdings: 102 

For nearly 25 years, QQQ has been the gold standard for Nasdaq ETFs. It encompasses the exchange’s top 100 stocks by modified market capitalization.

While official information technology companies make up 49% of its holdings, most folks would put companies like Alphabet (GOOG/GOOGL) and Meta (META) in that category too, even though they’re listed as communication services.

And we bet QQQ’s top 10 holdings will surprise you:

Source: Invesco

Yes, Pepsi is listed on the Nasdaq.

Performance

While the Nasdaq-100 and QQQ are down since last year’s highs, the index has done remarkably well year to date.

Source: Invesco

Over the last five years, the index is up 104.8% including dividends, which is a darn good return.

Competition

Rather than compare the Nasdaq-100 to the other top general ETF searches, we chose the top-searched tech ETFs for a better comparison:

• VanEck Semiconductor ETF (SMH): Focuses specifically on the 25 largest U.S.-based semiconductor companies
• Technology Select Sector SPDR Fund (XLK): Focuses entirely on tech stocks on the S&P 500
• iShares Expanded Tech-Software Sector ETF (IGV): Tracks a market-cap-weighted index of U.S. and Canadian software companies
• ETFMG Prime Cyber Security ETF (HACK): Tracks a tiered, equal-weighted index that targets companies that provide cybersecurity tech and services

IGV has the most holdings. But some of the more volatile ETFs, such as SMH, have the best aggregate returns over a five-year period.

Our Opinion 8/10

Invesco QQQ is a staple ETF for many investors.

That said, we see better long-term opportunities in key growth areas, including semiconductors. Plus, investors can buy technology-specific ETFs, like XLK, rather than an index based on who’s listed on an exchange.

• #2 Airline → #1 Pick
• Power Your Portfolio With Alternative Investments
• Why We Pick GM Over Ford
• Other Stocks Don’t Run Like a Deere