Yahoo Finance What Awaits Nasdaq ETFs in 2024 After Best Year Since 2020?
The tech-heavy Nasdaq Composite Index recorded the best annual performance since 2020, rising 43% in 2023. The Nasdaq-100, which tracks the top 100 stocks traded on the Nasdaq Exchange, posted its best year since 1999.
The outstanding performance can be attributed to several factors, which are likely to persist in 2024.
"Magnificent Seven" Surge: The so-called "Magnificent Seven" stocks soared between 50% and 250% in 2023, with more gains expected in 2024 (read: Magnify Gains in 2024 With "Magnificent Seven" ETFs).
Artificial Intelligence (AI) Mania: The emergence of generative AI drove excitement in the sector and pushed companies to invest in what is viewed as the next big thing. As such, the craze for AI is expected to stay in 2024, with many experts believing that the AI journey has just begun and more innovations in this field will unfold.
Rate Hike Pause: Hopes that the Fed is nearing the end of its interest rate hike cycle boosted the index for most of 2023. Now, with the Fed penciling in three rate cuts for 2024, the Nasdaq is expected to surge further. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.
Diversification: The Nasdaq's strong performance is not solely dependent on tech stocks. Now, the rally has broadened out and with lower interest rates and improving economic growth, it will likely get significantly wider (read: 5 Sector ETFs That Beat the Market in 2023).
Investors looking to ride the Nasdaq bulls could consider ETFs like Invesco QQQ QQQ, Invesco NASDAQ 100 ETF QQQM, First Trust NASDAQ-100 Equal Weighted Index Fund QQEW, Invesco NASDAQ Next Gen 100 ETF QQQJ and Direxion NASDAQ-100 Equal Weighted Index Shares QQQE. These funds may see massive trading volumes in the days ahead, given the bullish fundamentals.
Invesco QQQ (QQQ)
Invesco QQQ provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 57% of the assets, while consumer discretionary makes up 18.7% of the share.
Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with an AUM of $230.9 billion and an average daily volume of 43 million shares. Invesco QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 (Buy).
Invesco NASDAQ 100 ETF (QQQM)
Invesco NASDAQ 100 ETF is identical to QQQ, tracking the NASDAQ-100 Index, but comes with lower annual fees of 15 bps. It holds 102 securities in its basket, with a higher concentration on the top two firms.
Invesco NASDAQ 100 ETF accumulated $19 billion in its asset base and trades in an average daily volume of 1.6 million shares. It has a Zacks ETF Rank #2
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
Holding 101 stocks, First Trust NASDAQ-100 Equal Weighted Index Fund provides equal exposure to stocks by tracking the Nasdaq-100 Equal Weighted Index. It has amassed $2.3 billion in its asset base, while trading in moderate volumes of 139,000 shares a day, on average (read: A Guide to Nasdaq ETF Investing).
First Trust NASDAQ-100 Equal Weighted Index Fund charges 58 bps in annual fees and carries a Zacks ETF Rank #2.
Invesco NASDAQ Next Gen 100 ETF (QQQJ)
Invesco NASDAQ Next Gen 100 ETF follows the NASDAQ Next Generation 100 Index, which comprises securities of the next generation of Nasdaq-listed non-financial companies which means the largest 100 Nasdaq-listed companies outside of the NASDAQ-100 Index. In total, the product holds 105 securities, with each accounting for less than 2.1% of the assets.
Invesco NASDAQ Next Gen 100 ETF charges 15 bps in annual fees and sees a good trading volume of nearly 128,000 shares a day. With AUM of $690.5 million, QQQJ has a Zacks ETF Rank #3 (Hold).
Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE)
Direxion NASDAQ-100 Equal Weighted Index Shares provides an equal-weight exposure to the NASDAQ-100 Index by tracking the NASDAQ-100 Equal Weighted TR Index. Information technology takes 36.2% share while healthcare, consumer discretionary, communication services and industrials round off the next spots with double-digit exposure each.
Direxion NASDAQ-100 Equal Weighted Index Shares has amassed $1.1 billion and trades in an average daily volume of 280,000 shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2.
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Invesco QQQ (QQQ): ETF Research Reports
First Trust NASDAQ-100 Equal Weighted ETF (QQEW): ETF Research Reports
Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE): ETF Research Reports
Invesco NASDAQ Next Gen 100 ETF (QQQJ): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
