Which Nasdaq 100 ETF is the best?
With a proven history of high index performance, the Nasdaq-100® is the best way to invest in some of the top non-financial companies listed on Nasdaq.
With a proven history of high index performance, the Nasdaq-100® is the best way to invest in some of the top non-financial companies listed on Nasdaq.
The QQQ is more broadly diversified than the VGT, but it also comes with a higher expense ratio. So, the argument truly boils down to one of fit. If you are only going with one tech-heavy fund, the QQQ is probably the better choice because it offers a higher diversification factor.
NDQ Nasdaq 100 ETF is the ASX-traded equivalent of QQQ in that both ETFs seek to track the Nasdaq 100 Index, so NDQ and QQQ will give you exposure to the same companies. However, QQQ is not traded on the ASX, whereas NDQ is.
Rated the best-performing large-cap growth fund (1 of 347) based on total return over the past 15 years by Lipper, as of December 31, 2023.
One of the bigger winners of 2023 has been the Invesco QQQ ETF (NASDAQ: QQQ), which mirrors the Nasdaq-100 index. The Nasdaq-100 tracks the 100 largest nonfinancial stocks trading on the Nasdaq stock exchange. Its popularity has made it the second-most traded ETF in the U.S., based on daily volume traded.
VOO provides diversified exposure to a wide range of sectors and large-cap companies, making it suitable for conservative investors seeking stability. In contrast, QQQ concentrates on the technology sector and innovation, potentially offering higher growth potential but with added risk.
Over the past 10 years, VGT has outperformed VOO with an annualized return of 20.71%, while VOO has yielded a comparatively lower 13.04% annualized return. The chart below displays the growth of a $10,000 investment in both assets, with all prices adjusted for splits and dividends.
Because it passively follows the index, the QQQ share price goes up and down along with the tech-heavy Nasdaq 100. Passive management keeps fees low, and investors are rewarded with the full gains of the volatile index if it rises.
| Symbol | Name | 5-Year Return |
|---|---|---|
| VGT | Vanguard Information Technology ETF | 23.81% |
| FTXL | First Trust Nasdaq Semiconductor ETF | 23.30% |
| IXN | iShares Global Tech ETF | 23.19% |
| SPXL | Direxion Daily S&P 500 Bull 3X Shares | 23.01% |
Is QQQ still a good buy?
After watching it notch a spectacular gain of around 55% in 2023, many investors likely feel that it's too late for them to buy the Invesco QQQ ETF (NASDAQ:QQQ). But even after this massive rally, there's still plenty of reason to own QQQ for the long term.
QQQ has a dividend yield of 0.59% and paid $2.53 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Dec 27, 2023.
Building long-term wealth in the stock market
Over the past five years alone, QQQ has earned total returns of more than 132%, compared to the S&P 500's roughly 69% returns in that time. The fund's 10-year performance is even more promising, earning returns of more than 350%, while the S&P 500 saw returns of just 155%.
These are VanEck Vectors Semiconductor ETF SMH, Invesco NASDAQ 100 ETF QQQM, Communication Services Select Sector SPDR Fund XLC, Vanguard Mega Cap Growth ETF MGK, and Vanguard Consumer Discretionary ETF VCR. These funds are likely to continue outperforming should the existing trends prevail.
The Fidelity Blue-Chip Growth ETF FBCG has jumped 58.7% in 2023 to become the best-performing U.S. fund, excluding ETNs and leveraged products, according to FactSet data. The WisdomTree U.S. Quality Growth Fund QGRW is up 56.2% this year, while the Invesco QQQ Trust Series I QQQ has risen 55.6% in 2023.
Technology ETFs are the best-performing funds in 2023, driven by a boom in AI. The top-performing ETF of 2023 is iShares Expanded Tech Software Sector ETF (IGV), with a year-to-date (YTD) return of 55.22%.
QQQM was welcomed as a better option for investors in the Nasdaq 100 index when launched in 2020. But its low AUM and volume were an initial concern. QQQM's price has outperformed QQQ especially in boom markets and pays a slightly higher dividend. But the outperformance varies from year to year.
One of the few differences between these two funds is their expense ratio. The newer QQQM has a lower expense ratio by 0.05%. QQQM has an expense ratio of 0.15% compared to QQQ expense ratio of 0.20%. QQQM is a better option if you want to pay the lowest fees possible since its expense ratio is 25% smaller than QQQ.
The Invesco QQQ Trust is one of the most popular ways to invest in the top Nasdaq stocks. There's a newly launched Nasdaq-100 fund that offers essentially the same product as the QQQ but with lower annual fees. Investors may want to diversify away from large-cap growth stocks with these two ETFs.
VOO will offer consistent returns with diversification and lower costs. QQQ will offer you the opportunity to bring in higher returns, but these come with more risks and a higher cost. If you're looking for the best return possible on your money, then you're going to want to go with QQQ.
What is better than QQQ?
For investors seeking an alternative to QQQ's mega-cap exposure, the Invesco S&P 500 Top 50 ETF (XLG) is an excellent option.
Over the past 10 years, SCHD has underperformed QQQ with an annualized return of 11.93%, while QQQ has yielded a comparatively higher 18.66% annualized return. The chart below displays the growth of a $10,000 investment in both assets, with all prices adjusted for splits and dividends.
Our pick for the best overall Vanguard ETF is Vanguard Total World Stock ETF. For a 0.07% expense ratio, Vanguard Total World Stock ETF offers a globally diversified exposure across over 9,500 stocks.
Vanguard's unique cost structure, the economies of scale it has achieved, and the total number of assets under management (AUM) allow it to offer its ETFs at the lowest cost available in the market. We've listed 10 of the firm's cheapest ETFs by their expense ratio.
What do analysts say about VOO? VOO's analyst rating consensus is a Moderate Buy. This is based on the ratings of 505 Wall Streets Analysts.
