Big Money’s Top 5 ETFs

A new contender is shaking up the ETF arena, and it’s not pulling any punches. 

Our proprietary TrackStar data has revealed a groundbreaking shift in the search patterns of big money managers.

And the Invesco Nasdaq 100 ETF (QQQ) is the talk of the town.

The S&P 500 ETF (SPY), the long-standing champion of search volume, is feeling the heat as QQQ closes in on its territory. 

The once-yawning chasm between these two ETF heavyweights has shrunk to a mere sliver this year.

This startling development leaves us with a burning question: Why?

We dove into the details of this ETF to see what’s interested them.

Here’s what we found.

Key Facts About QQQ

• Net assets: $250 billion
• 12-month trailing yield: 0.62%
• Inception: March 10, 1999
• Expense ratio: 0.20%
• Number of holdings: 100

Invesco’s Nasdaq 100 ETF (QQQ) has been a staple of the investment community since its inception during the dot-com bubble.

While it took most of the next bull market to recover all it had lost, the decade that followed the Great Recession saw the Nasdaq 100 index and the ETF significantly outperform the broader market.

Today, the QQQ’s top holdings are similar to those in the S&P 500, with heavyweights like Microsoft, Apple, and Amazon.

Source: Invesco

However, the Nasdaq 100 has a much heavier bias towards technology stocks, which make up almost 60% of its total weight.

Source: Invesco

This gives the index an extra kick during growth periods but a lot of volatility along the way.

Performance

No one can ignore the rise of technology stocks in today’s society.

Decades ago, energy and industrial companies ruled the world.

Today, it’s iPhones and EVs.

Even with the pandemic, the QQQs have returned a whopping 136% in the last five years.

It’s 10-year returns are a stunning +450%.

Source: Invesco

Competition

The Nasdaq is one of four major U.S. market indexes tracked by investors.

The ETFs below track the other three, and one tracks the Japanese stock market.

• SPDR S&P 500 ETF (SPY): Tracks the S&P 500 large-cap index
• SPDR Dow Jones Industrial Average ETF (DIA): Tracks the 35 stocks in the Dow Jones Industrial Average
• iShares Russell 2000 ETF (IWM): Tracks the 2000 stocks in the Russell 2000 small-cap index
• iShares MSCI Japan ETF (EWJ): Tracks a broad set of Japanese stocks.

There is no question that technology stocks have done better over the past decade than any other sector. And the bigger they are, the better they do.

Our Opinion 10/10 

Technology stocks are here to stay. And in many respects, will continue to grow well beyond where they are today.

The Nasdaq 100 ETF QQQ may come with increased volatility.

Use that to your advantage.

Buy when prices get excessively low. Take slightly smaller position sizes. And let the market work its magic.