Should You Buy the Nasdaq 100 QQQ ETF?

Something unusual has happened.

Rarely do we ever see the SPDR S&P 500 SPY ETF knocked out of the first search position amongst financial pros.

Yet, this past month’s TrackStar data put Invesco’s Nasdaq 100 QQQ ETF firmly in the top spot despite its lagging performance of late.

Most investors associate the Nasdaq 100 with technology. But there’s a bit more to this ETF than meets the eye.

Here’s what you need to know.

Key Facts About QQQ

• Net assets: $288 billion
• 12-month trailing yield: 0.62%
• Inception: March 10, 1999
• Expense ratio: 0.20%
• Number of holdings: 102

The Nasdaq 100 index comprises the 100 largest companies by market capitalization listed on the Nasdaq Exchange.

And the QQQ ETF tracks that index.

Since technology companies often list on the Nasdaq, it’s no surprise that the index is often considered a proxy for technology.

However, if you look at the top 10 holdings, you’ll notice a name that seems out of place.

Source: Invesco

Costco (COST) is by no means a tech company. Yet, it’s one of the largest companies listed on the Nasdaq exchange.

In fact, while nearly 2/3rds of the Nasdaq 100 is comprised of technology companies, a significant portion is dedicated to other sectors.

Source: Invesco

Performance

Because of the heavy tech weighting and the sectors outstanding performance over nearly any period since the mid 1990s, it’s no surprise to see the massive returns listed below.

Source: Invesco

Competition

Now, our analysis wouldn’t be complete without taking a look at the other top ETF searches by financial pros and comparing them to the QQQ.

• SPDR S&P 500 ETF (SPY): The gold standard ETF that tracks the S&P 500 index.
• SPDR S&P Regional Banking ETF (KRE): A niche ETF that follows the regional banking sector with holdings weighted by market-cap.
• SPDR Barclays High Yield Bond ETF (JNK): Unusual for this list, the JNK holds a diverse portfolio of junk bonds as way to give investors exposure to higher yield dividends while minimizing risk.
• iShares Russell 2000 ETF (IWM): For small cap lovers, the IWM tracks the Russell 2000 small-cap ETF made up of companies with less than $5 billion in market capitalization.

This comparison clearly illustrates QQQ’s exceptional performance relative to the other most popular ETFs.

Our Opinion 10/10 

There is no better ETF that tracks the Nasdaq 100.

The QQQ comes with low fees and exceptional liquidity, including daily option expirations.

The Nasdaq 100 is heavily weighted towards technology, so make sure to take that into account when making your investment decisions.

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