When it comes to the Nasdaq Composite and Nasdaq-100 indexes, many investors think of growth stocks, including those from communication services, consumer and technology sectors. In fact, those three sectors combine for more than 82% of the Nasdaq-100 Index’s roster.
And when it comes to Nasdaq exchange traded funds (ETFs), the Invesco QQQ (NASDAQ:QQQ) is the dominant name. Home to $74.56 billion in assets under management, QQQ is one of the largest ETFs in the world.
While Nasdaq is known as one of the world’s largest operator of equity exchanges, the company has been a force in the indexing world dating back to the early 1970s.
“Nasdaq calculates more than 40,000 diverse indexes, providing coverage across asset classes, countries and sectors,” according to the company.
That means in addition to QQQ, there are plenty of compelling Nasdaq ETFs out there, including some appropriate for investors seeking robust technology sector exposure. Here are some Nasdaq ETFs to consider beyond the famed QQQ.
Invesco DWA NASDAQ Momentum ETF (DWAQ)
Expense ratio: 0.60% per year, or $60 on a $10,000 investment.
The Invesco DWA NASDAQ Momentum ETF (NASDAQ:DWAQ) is a Nasdaq ETF that can be used as an alternative or complement to the aforementioned QQQ. DWAQ’s underlying benchmark is the Dorsey Wright NASDAQ Technical Leaders Index.
“The Index is comprised of approximately 100 securities from an eligible universe of approximately 1,000 securities of large capitalization companies from the NASDAQ US Benchmark Index. All securities in the universe are ranked using a proprietary relative strength (momentum) measure,” according to Invesco.
DWAQ is a fine idea for investors looking for growth exposure because more than 83% of the fund’s holdings are large-, mid- and small-cap growth stocks. Additionally, this Nasdaq ETF is a valid consideration for investors looking to overweight technology stocks as DWAQ allocates more than 31% of its roster to that sector.
ProShares Equities for Rising Rates ETF (EQRR)
Expense ratio: 0.35%
The ProShares Equities for Rising Rates ETF (NASDAQ:EQRR) by its very name would seem to imply it is not useful at a time when the Federal Reserve is reportedly mulling interest rate cuts. However, this Nasdaq ETF is still up nearly 10% year-to-date and is a sensible option for investors looking for a Nasdaq ETF with reduced tech exposure.
EQRR, which is nearly two years old, tracks the Nasdaq U.S. Large Cap Equities for Rising Rates Index. The aim of this Nasdaq ETF is to provide exposure to “sectors that have had the highest correlations to 10-Year U.S. Treasury yields and within those sectors, the stocks that have had a strong tendency to outperform as rates rise,” according to ProShares.
Giving EQRR something of a value tilt, the fund devotes over 36% of its combined weight to the financial services and industrial sectors, indicating that it can mitigate some of the volatility associated with other growth-heavy Nasdaq ETFs.
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
Expense ratio: 0.65%
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (NASDAQ:ROBT) is a prime example of a thematic ETF and the theme offers ample long-term potential. ROBT, which is nearly a year and a half old, targets the Nasdaq CTA Artificial Intelligence and Robotics Index and holds 95 stocks. This Nasdaq ETF places plenty of competition, but ROBT is compelling avenue to robtics investing.
ROBT features exposure to three segments of the artificial intelligence and robotics universe — companies the issuer deems to be enablers, engagers and enhancers. Engagers command 60% of ROBT’s index while enablers garner 25% and enhancers land at 15%. Robotics ETFs usually feature exposure to multiple sectors, but ROBT is applicable for tech investors because the Nadaq ETF devotes 61% of its weight to that sector.
Industry observers expect big growth for the themes represented in ROBT. Global robotics spending could swell to almost $231 billion by 2021, according to IDC while artificial intelligence could command $15.7 trillion of the global economy by 2030.
Invesco NASDAQ Internet ETF (PNQI)
Expense ratio: 0.60%
With the Nasdaq being home to so many of the largest most venerable internet companies, it makes sense that there would be a dedicated Nasdaq ETF for those stocks, That fund is the Invesco NASDAQ Internet ETF (NASDAQ:PNQI), which tracks the NASDAQ Internet Index.
There is plenty of competition in the internet ETF arena, but PNQI has been admirable performer, returning more than 83% over the past three years. Plus, this Nasdaq ETF is by no means small as highlighted by its $570.1 million in assets under management.
What makes this Nasdaq ETF interesting relative to traditional internet ETF competitors is that mixes U.S. and international companies whereas competing funds usually focus on domestic or ex-US stocks, not both. Led by Alibaba (NYSE:BABA), four of PNQI’s top 10 holdings are ex-US companies. In fact, PNQI has been a better than some rival funds that only focus on international internet companies.
First Trust Nasdaq Semiconductor ETF (FTXL)
Expense ratio: 0.60%
There are a few semiconductor funds out there, but the First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) is one of the more overlooked members of that group, but this Nasdaq ETF is a way for investors to access a unique weighting methodology for chip stocks.
FTXL’s underlying index is the Nasdaq US Smart Semiconductor Index. That benchmark uses growth, value and volatility as barometers for stock inclusion. That means that over longer holding periods, this Nasdaq ETF’s returns could differ significantly from traditional chip funds.
The median market value of FTXL’s 30 components is $14.5 billion, indicating the fund leans toward smaller chip names, but even with that, the fund trades at favorable multiples relative to basic small-cap index funds. And even with the size bias, FTXL remains home to some of the largest semiconductor stocks. FTXL is up nearly 26% year-to-date.
Todd Shriber does not own any of the aforementioned securities.
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