Despite its popularity, the Invesco QQQ Trust ETF (QQQ) is not always the best choice for investors looking to invest in high-flying tech stocks found in the Nasdaq-100 index. While QQQ has a strong track record and tracks the performance of the Nasdaq-100, which consists mainly of tech companies, there are other ETFs that may offer better opportunities for investors.
One alternative to QQQ is the Invesco Nasdaq 100 ETF (QQQM), which was launched in 2020. This ETF uses the same criteria and trading rules as QQQ but charges a lower expense ratio of 0.15% compared to QQQ’s 0.2%. The newer ETF is designed for small, individual buy-and-hold investors and may be a better option for those looking to invest in the Nasdaq-100 index.
For investors looking for a more diversified portfolio, the Invesco S&P 500 Equal Weight ETF (RSP) may be a good choice. This ETF tracks the S&P 500 Equal Weight Index, which spreads the portfolio evenly across every constituent of the index rather than being market-cap weighted. This can provide investors with more exposure to smaller companies in the index and potentially better returns over the long run.
Another option for investors considering QQQ is to invest in a small-cap value ETF. Small-cap and value stocks have historically outperformed large-cap growth stocks in the long run, and there may be more upside potential for small-cap value stocks at present. ETFs like the Avantis U.S. Small Cap Value ETF (AVUV) offer exposure to small-cap value stocks with lower P/E ratios compared to the Nasdaq-100 index.
Overall, while QQQ has its merits, there are other ETFs that investors may want to consider for their portfolios. Each ETF offers different investment opportunities and it’s important for investors to carefully research and consider their investment goals before making a decision.