Top 10 Nasdaq ETFs and Mutual Funds You Can Choose to Buy

The S&P 500 and the Dow Jones Industrial average have been the big-name indices in the past years. However, tables seemed to have turned as the Nasdaq-100 has grown to become the real deal these days.

The Nasdaq-100 index came into existence way back in 1985. It can be described as a select portion of the more extensive Nasdaq composite's top one hundred nonfinancial organizations. One thing has been dominating the Nasdaq-100 index since its inception and is even more prevalent lately. It is the technology stock. As a matter of fact, technology stocks now take a considerable portion of Nasdaq-100 stocks, accounting for up to 50% of the fund's assets.

Nasdaq-100 has proved to be an excellent performer for close to four decades now. Since the year 2011, it has run up about 445%, beating the S&P 500 at 180%, the Dow Jones Industrial average at 148%, and the broader Nasdaq composite at 348%. These figures tell you that the Nasdaq-100 is a worthy option. In this article, we are going to examine some of the top Nasdaq ETFs and mutual funds. So, without much ado, let us get started.

1.     Invesco QQQ Trust

Top on our list of the best Nasdaq ETFs is the Invesco QQQ Trust. It is the oldest of all the funds. It started way back in 1999. It faced many challenges at its early stages, following the dot com boom that existed at the time of its inception. However, the long-term investors who have walked the whole journey with Invesco QQQ Trust have no reason to complain. Additionally, Invesco QQQ Trust has no reason to complain since it has had several years of success, realizing a tremendous growth in its assets. However, a vast portion of its wins has come even more recently.

For instance, By the third quarter of 2010, Invesco QQQ Trust boasted of having $22 billion in assets. This figure is from the CFRA's First Bridge ETF database. Even more impressive is how the fund managed to grow positively, hitting $38 billion worth of assets within three years. However, the growth remained stagnant for the three years that followed (2013 to 2016). Another recognizable trend then occurred for the following years. Invesco QQQ Trust hit $74 billion worth of assets by 2018. By October 2020, the fund's asset base had hit $140 billion, an all-time high. The asset base has continued to grow, despite the impacts brought about by the pandemic.

Some of the top holdings for Invesco QQQ Trust include familiar names in the tech industry, such as Apple, which holds 13.6% of the assets and Microsoft holding 10.7%. Others include the consumer giant holding 11% of the total assets and Alphabet (7%).

2.     Invesco Nasdaq 100 ETF

The Invesco Nasdaq 100 ETF is one of the most novel products in the Invesco basket. It was recently launched on 13th October 2020. It can be looked at as the cheaper version of Invesco QQQ Trust.

However, the Invesco Nasdaq 100 ETF is a tremendously liquid fund, changing hands at a 47 million shares rate daily. Consequentially, it is capable of creating tight bid-ask spreads, which are very great options for traders. The "buy and hold" kind of investors will find Invesco Nasdaq 100 ETF more appealing because of its cost-saving advantages. So, if you are such an investor, then this Nasdaq ETF will be the ideal option.

3.     USAA Nasdaq-100 Index Fund

One thing you have to know is that the Nasdaq ETF is not just meant for ETF. It also has other hidden gems, such as the USAA Nasdaq 100 index fund. The USAA Nasdaq 100 index fund, despite being old enough (launched in October 2000), only has about $3.5 billion worth in assets. Like the Invesco QQQ Trust, the USAA Nasdaq 100 index fund is also a great performer. It has for a long time been ranked in the top 10% funds under its category.

A 0.48% in expenses also characterizes it. However, although these expenses are more than what you will pay in the Invesco QQQ Trust and most indexed ETFs, it is comparatively lower than the Lipper category average expense rate of 0.96%. As such, the USAA Nasdaq 100 index fund can be seen as a cheap side for a mutual fund. Another critical thing to note about the USAA Nasdaq 100 index fund is that most of its holdings are virtually identical to those of Invesco QQQ Trust. All they do is track the index.

4.     Invesco Nasdaq 100 Index Fund

The Invesco Nasdaq 100 Index Fund is as old as the Invesco QQQ Trust since the two were launched simultaneously. However, the Invesco Nasdaq 100 Index Fund is a bit different in purpose since its primary role is to track the Nasdaq 100 ETF index in mutual funds. The fund has been of benefit to Invesco since it has allowed it to reach a broader audience. Specifically, the fund is aimed at retirement accounts that do not have the ability to reach out to the ETFs.

However, although the Invesco Nasdaq 100 Index Fund has come with myriad benefits, it also has one single disadvantage. It comes with Class R6 Shares, which are majorly meant for retirement schemes and shareholders belonging to omnibus intermediaries that meet specific standards. The main disadvantage here is that it makes one unable to access the traditional brokerage accounts. However, this is just a minor challenge as several solutions come with this. For instance, you can easily access your traditional brokerage accounts using the QQQ or QQQM. Therefore, this should not be seen as a big issue.

5.     Direxion Nasdaq-100 Equal Weighted Index Shares

The Direxion Nasdaq 100 Equal Weighted Index Shares comes with an exciting take on the index. It primarily invests in an equal-weighted version of the Nasdaq 100. An index rebalancing is carried out every March, June, September, and December of every year. Index rebalancing resets each of its 100 stocks at 1% of the total assets. The weights usually vary depending on their performance in the course of the preceding three months after index rebalancing. After the next rebalancing, however, they will all be set back to equal footing.

Some of the famous names in the Direxion Nasdaq 100 Equal Weighted Index holdings include Liberty Global and NetApp, all of which have as much sway as the Microsofts and the Apples of this world.

The bright side of the Direxion Nasdaq 100 Equal Weighted Index is that it comes with much fewer risks. However, although it comes with fewer risks, it also poses a problem in the sense that it does not allow its victors to ride. For instance, looking at the likes of Amazon and Apple, you will notice that they have grown to have an overwhelming presence in all the major indices. Such growth allows such companies to have tremendous benefits in their upside. The case is different with Direxion Nasdaq 100 Equal Weighted Index since it does not provide companies with such opportunities.

6.     Invesco Nasdaq Next Gen 100 ETF

Whereas the Invesco QQQ Trust keeps track of the top 100 largest Nasdaq non-financials, the Invesco Nasdaq Next Gen 100 ETF tracks the next 100 stocks, which explains the origin of its name. In short, Invesco Nasdaq Next Gen 100 ETF does not invest in the Nasdaq-100 but its junior stocks.

There are several similarities between the Invesco Nasdaq Next Gen 100 ETF and the Invesco QQQ trust. For instance, tech companies are the predominant factors in both cases. 46% of the Invesco Nasdaq Next Gen 100 ETF's portfolio are communication and consumer discretionary stocks.

However, the Invesco Nasdaq Next Gen 100 ETF is much less heavy than the Nasdaq QQQ trust. Its top companies make up 57% of the 100-stock fund weight. Some of the famous names in the Invesco Nasdaq Next Gen 100 ETF holdings include the User Authentication Cloud Firm, Okta, and Marvel Technology, a semiconductor company.

7.     ProShares Inverse and Leveraged Nasdaq-100 ETFs

Last but not least is the ProShares Inverse and Leveraged Nasdaq-100 ETFs. This group of ETFs are a bit special than others because they are not buy-and-hold investors. They specialize in offering several ETFs that will provide leveraged exposure to the Nasdaq ETF index.

You can combine the two ideas of inverse and leveraged exposure via the ProShares UltraShort QQQ for the 2 times exposure and the ProShares UltraShort QQQ, a 3times fund.

Conclusion

The Nasdaq-100 has been gaining a lot of popularity these days. It has even surpassed the big names such as the S&P 500 and the Dow Jones Industrial Average. It mainly features tech companies. This article has provided you with the top seven Nasdaq-100 ETFs and mutual funds.