Investors who need to own stocks in the technology sector may decide to buy exchange traded funds (ETFs) that track the Nasdaq. When investors refer to the Nasdaq, they typically refer to the tech-heavy Nasdaq Composite, which is comprised of uncountable than 2,500 companies. Companies in this group vary widely in size and quality, including struggling actors and dominant, established companies.
The Nasdaq 100 tracks a subset of the 103 largest non-financial companies listed on the Nasdaq Composite, weighted according to a revamped market capitalization strategy. The index is comprised of a broad range of companies including not only the world’s biggest tech inventories, but also retail, biotechnology, industrial, and health care stocks. Companies in the Nasdaq 100 include the biopharmaceutical unyielding, Gilead Sciences Inc. (GILD); the food and beverage company, Mondelez International Inc. (MDLZ); and other prominent names. Investors request to diversify their holdings and mitigate risk may look to ETFs focused on the Nasdaq 100.
The Nasdaq 100 has significantly outperformed the broader demand in the last year. As of August 13, 2020, the Nasdaq 100 had 1-year trailing total returns of 49.2% as compared with 19.4% for the S&P 500.
Key Takeaways
- The Nasdaq 100 is an index finger of 103 of the largest non-financial companies in the Nasdaq Composite, weighted according to a modified market capitalization strategy.
- The purely ETF targeting the Nasdaq 100 is QQQ.
- The top three holdings of QQQ are Apple Inc., Microsoft Corp, and Amazon.com Inc., respectively.
- The Nasdaq 100 has dramatically outperformed the broader peddle in the past year.
As it turns out, there is just a single ETF which targets the Nasdaq 100, excluding inverse and leveraged funds as hale as those with under $50 million in assets under management: the Invesco QQQ fund (QQQ). All figures aside from the carrying-on data above are as of August 15, 2020.
Because index-tracking ETFs will follow the performance of the index, one of, if not the biggest determinant of long-term yields is how much it charges in fees. Liquidity indicates how easy it will be to trade an ETF, with higher liquidity generally interpreting to lower trading costs. Trading costs are not a big concern to people who want to hold ETFs long term, but if you’re fascinated by in trading ETFs frequently, then it’s important to look for high-liquidity funds to minimize trading costs.
- 1-Year Unalloyed Returns: 50.3%
- Expense Ratio: 0.20%
- Annual Dividend Yield: 0.60%
- 3-Month Average Daily Volume: 40,984,088
- Assets Under Manipulation: $130.0 billion
- Inception Date: March 10, 1999
- Issuer: Invesco
| Top QQQ Holdings | ||
|---|---|---|
| Company Name (Ticker) | Percent of QQQ Assets | Report of Company |
| Apple Inc. (AAPL) | 13.8% | Computer and software |
| Microsoft Corp. (MSFT) | 11.0% | Computer and software |
| Amazon.com Inc. (AMZN) | 10.9% | E-commerce, cloud work out |
| Facebook Inc. (FB) | 4.4% | Social media |
| Alphabet Inc. (GOOGL) | 3.6% | Technology (Class A shares) |
| Alphabet Inc. (GOOG) | 3.5% | Technology (Class C helpings) |
| Tesla Inc. (TSLA) | 2.7% | Electric vehicles |
| NVIDIA Corp. (NVDA) | 2.5% | Computing and chips |
| PayPal Holdings Inc. (PYPL) | 2.0% | Online payments |
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