5 ETFs to Ride On as Nasdaq Clocks Best January in 20 Years
Amid the broad market rally and the return of investors’ risk appetite, the tech-heavy Nasdaq Composite Index is sizzling this year. The index gained 10.7% last month, marking its best January performance since 2001. The astounding performance was driven by easing inflation and hopes of the Fed’s slower rate hike path.
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, Simplify Nasdaq 100 PLUS Convexity ETF QQC and Fidelity Nasdaq Composite Index Tracking Stock ONEQ. These funds might see massive trading volumes in the days ahead, given the bullish fundamentals.
Most of the rally came from the soaring tech stocks, which had their best start to a year in more than two decades. The bets that the Fed might slowdown the rate hike plan has propelled the surge in the tech stocks as inflation is cooling, wage growth decelerating, and consumer confidence is increasing (read: 5 Tech ETFs Riding High on Sectors' Comeback to Start 2023).
Consumer prices unexpectedly fell for the first time in more than two-and-a half years in December. The consumer price index dipped 0.1% in December after gaining 0.1% in November. It rose 6.5% year over year in December, down from a 7.1% year-over-year increase in November and a recent peak of 9.1% in June. The annual inflation growth was the smallest rise since October 2021. The data has put the Federal Reserve on track to slow the pace of interest-rate hikes.
Additionally, investors have jumped in to buy the most beaten-down stocks of 2022 and the Nasdaq had its fourth-worst year on record, and worst since 2008. The Nasdaq is statistically highly oversold versus the S&P 500 right now, per various market participants.
Further, the Nasdaq continued its strong run, overcoming the weak earnings releases from some of the top players like Microsoft Corp. (MSFT), Intel Corp.'s (INTC) and Snap Inc. (SNAP). Microsoft saw its cloud business slowdown in the latest quarter and expects further deceleration, while Intel missed estimates for both earnings and revenues and offered a weak outlook for 2023, citing cooling demand for its chips used in personal computers. In fact, Intel had its worst year since the dot-com bust. Snap forecasts its first-ever quarterly revenue decline, citing a flurry of changes to Snapchat’s advertising products that may be disruptive to the social media app’s business.
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 49% of the assets, while communication services and consumer discretionary make up for a 16.6% and 15.7% share, respectively.
Invesco QQQ is one of the largest and most-popular ETFs in the large-cap space, with AUM of $157.6 billion and an average daily volume of around 43 million shares. Invesco QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 Stocks Powering Nasdaq ETF to Start 2023).
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 103 securities in its basket, with a higher concentration on the top two firms.
Invesco NASDAQ 100 ETF has accumulated $6.6 billion in its asset base and trades in an average daily volume of 858,000 shares. It has a Zacks ETF Rank #3.
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 on the Nasdaq-100 Equal Weighted Index. It has amassed $1.3 billion in its asset base while trades in moderate volumes of nearly 133,000 shares a day on average (read: Equal-Weight ETFs Win Over Market-Cap Peers in 2022).
First Trust NASDAQ-100 Equal Weighted Index Fund charges 57 bps in annual fees and trades in an average daily volume of 133,000 shares. QQEW carries a Zacks ETF Rank #3 with a Medium risk outlook.
Simplify Nasdaq 100 PLUS Convexity ETF (QQC)
Simplify Nasdaq 100 PLUS Convexity ETF seeks to provide capital appreciation by tracking a basket of large-cap U.S. growth stocks while aiming to boost performance during extreme market moves up or down via a systematic options overlay. The fund’s core holding provides investors with Nasdaq 100 Index exposure.
Simplify Nasdaq 100 PLUS Convexity ETF has gathered $3.9 million in its asset base and charges 44 bps in annual fees. It trades in a paltry average daily volume of about 1,000 shares.
Fidelity Nasdaq Composite Index Tracking Stock (ONEQ)
Fidelity Nasdaq Composite Index Tracking Stock tracks the Nasdaq Composite Index, holding a broad basket of 1,030 stocks.
Fidelity Nasdaq Composite Index Tracking Stock has AUM of $4 billion and an average daily volume of around 390,000 shares. It charges 21 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Invesco QQQ (QQQ): ETF Research Reports
Fidelity Nasdaq Composite Index ETF (ONEQ): ETF Research Reports
First Trust NASDAQ-100 Equal Weighted ETF (QQEW): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
Simplify Nasdaq 100 PLUS Convexity ETF (QQC): ETF Research Reports
