The technology sector experienced a decline in 2022 but has since bounced back in 2023, highlighting the significance of including technology companies in investment portfolios. Investors seeking broad exposure to the sector may consider investing in one of the top Nasdaq 100 Index exchange-traded funds (ETFs). The Nasdaq 100 Index, which is heavily focused on tech stocks, has seen a nearly 20% increase in the past year, outperforming the S&P 500, which has grown by 9%.
Two popular ETFs that provide exposure to the Nasdaq 100 index without offering inverse or leveraged coverage and have over $50 million in assets under management are the Invesco NASDAQ 100 ETF (QQQM) and the Invesco QQQ Trust (QQQ). Both funds have top holdings in companies like Apple Inc., Microsoft Corp., and Amazon.com Inc.
Another fund that tracks the same index but with a focus on environmental, social, and governance (ESG) factors is the Invesco ESG NASDAQ 100 ETF (QQMG). While this fund has outperformed the other two in the past year, it currently has around $18 million in assets under management.
The Invesco NASDAQ 100 ETF (QQQM) boasts a performance of 15.6% over the past year, with an expense ratio of 0.15% and assets under management of $13.9 billion. On the other hand, the Invesco QQQ Trust (QQQ) has seen a performance of 15.5% over the same period, with an expense ratio of 0.20% and assets under management of $202.0 billion.
QQQM is a more cost-effective option compared to QQQ, reinvesting dividends and offering a lower expense ratio and share price. QQQ, being one of the oldest and most popular ETFs, is highly liquid and often used for short-term trading purposes by institutional investors. However, many buy-and-hold investors are drawn to QQQ’s popularity despite its higher expense ratio.
The top 10 holdings for both QQQM and QQQ include companies like Apple Inc., Microsoft Corp., and Amazon.com Inc. These holdings reflect the dominance of technology and e-commerce companies in the Nasdaq 100 index.
In conclusion, investing in ETFs that track the Nasdaq 100 index can provide investors with exposure to the thriving technology sector. Both QQQM and QQQ offer opportunities for investors to capitalize on the growth potential of tech stocks while considering factors like expense ratios and asset management.