14 Nasdaq-100 ETFs and Mutual Funds to Buy

Invesco QQQ Trust

• Assets under management: $160.8 billion
• Expenses: 0.20%, or $20 annually for every $10,000 invested

The Nasdaq-100 Index is ultimately just a set of data – the Invesco QQQ Trust (QQQ, $301.16) is the product that turned that data into shareholder returns.

The QQQ came to life in March 1999 – unfortunate timing for its first few years, given the dot-com bubble bust that happened shortly thereafter, but given the returns we outlined above, long-term investors aren't exactly complaining.

Neither is Invesco.

"At the end of the third quarter of 2010, QQQ had $22 billion in assets according to CFRA's First Bridge ETF database," says Todd Rosenbluth, head of research at VettaFi. "The fund grew to $38 billion three years later, but was still at the same mark at the end of the third quarter of 2016 before taking off. By the end of September 2018, QQQ assets doubled to $74 billion and as of early September 2020, the fund's asset base exceeded $140 billion before closing the quarter with $137 billion."

Fast-forward a couple more years, and it's up to $160 billion under management. The QQQ has become ubiquitous – you can find it in limited-selection beginner investment apps and robo advisors, and even its options contracts are popular among advanced traders.

As for its innards, the QQQ ETF is a simple index fund that tracks the Nasdaq-100. That means at the moment, it's 50% invested in information technology, 16% each in consumer discretionary and telecommunications, 7% in healthcare, 6% in consumer staples, and the rest peppered among industrials, utilities and energy.

Top holdings include familiar tech names such as Microsoft (MSFT, 12% of assets) and Apple (AAPL, 12%), but also telecommunications stock Alphabet (about 7% spread between its GOOG and GOOGL shares), consumer giant Amazon.com (AMZN, 6%) and industrial play Tesla (TSLA, 4%).

It's not quite accurate to call the Nasdaq-100 a broad-market index because there are so many areas of the market that are quiet or downright missing in QQQ. But it's not a wholesale technology ETF, either.

It is what it is, mostly for better than for worse.

Learn more about QQQ at the Invesco provider site.

Invesco Nasdaq 100 ETF

• Assets under management: $7.4 billion
• Expenses: 0.15%

While the QQQ is wildly popular, it does have one small shortcoming: Compared to many other broad-market and sector index funds, its 0.20% in annual fees are a touch on the high side.

However, Invesco took care of that in October 2020 by launching the Invesco Nasdaq 100 ETF (QQQM, $123.90). It's simply a cheaper version of the QQQ.  At 0.15% annually, it costs 5 basis points less than its sister fund (a basis point is one one-hundredth of a percentage point).

So … why not just make QQQ cheaper?

The QQQ ETF is an extremely liquid fund that changes hands at a rate of more than 50 million shares daily, according to Morningstar. As a result, it's able to create tight bid-ask spreads. That's ideal for traders, who aren't as concerned about low expense ratios as longer-term investors. So rather than drop the fee on QQQ, Invesco created QQQM for buy-and-hold investors "most focused on cost-savings."

Invesco can't complain. In less than three years, QQQM has soaked up more than $7 billion in assets  – without kneecapping the QQQ, which has gained $20 billion since QQQM's launch.

As for investors: If you want to buy the Nasdaq-100 Index and hold on to it for a long time, your most significant cost savings will be from the 5-bps discount in QQQM. Traders, however, will benefit more from entering and exiting trades with pinpoint precision, which the QQQ's trading volume offers.

Learn more about QQQM at the Invesco provider site.

Direxion Nasdaq-100 Equal Weighted Index Shares

• Assets under management: $503.4 million 
• Expenses: 0.35%

Invesco might be the most well-known fund to leverage the Nasdaq-100, but Direxion offers an interesting take on the index, too.

The Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE, $69.50) invests in an equal-weighted version of the Nasdaq-100. Every March, June, September and December, the index is rebalanced, resetting each of its 100 stocks at 1% of assets. Their weight will fluctuate depending on how they perform over the next three months, but once the next rebalancing occurs, they're all set back onto equal footing.

That means "bottom" Nasdaq-100 holdings like Rivian Automotive (RIVN) and Lucid Group (LCID) have just as much sway as the Apples and Microsofts of the world.

The good news? There's far less single-stock risk. Consider that with the QQQ, two stocks each account for more than 10% of its performance, and there are a few more with high-single-digit weights. A bad stretch for any one of those stocks could cancel out the progress of several smaller-weighted constituents, thus dragging on the ETF's returns. Equal-weighting blunts this downside risk.

The bad news? Long-term, it doesn't allow its winners to ride. The reason the likes of Apple and Microsoft are an overwhelming presence in the major indexes (which tend to be weighted by market capitalization) is simply because they've grown so much. This allows these indexes to increasingly benefit in their upside.

Ultimately, the choice between QQQE and QQQ/QQQM just comes down to what you're comfortable with from a risk perspective.

Learn more about QQQE at the Direxion provider site.

Invesco ESG Nasdaq 100 ETF

• Assets under management: $10.2 million
• Expenses: 0.20%

The Invesco ESG Nasdaq 100 ETF (QQMG, $20.11) is another of the funds Invesco created to capitalize on the QQQ's popularity – and its October 2021 launch also dovetailed with the rising popularity of environmental, social and governance (ESG) investing.

As the name might suggest, this ETF invests in Nasdaq-100 stocks that also meet certain ESG criteria. Among the requirements for inclusion in this fund?

• Meet an ESG Risk Rating Score threshold
• Be deemed compliant with U.N. Global Compact principles
• Meet business controversy-level requirements
• Not be involved in certain business activities, including alcohol, cannabis, controversial weapons, gambling, military weapons, nuclear power, oil & gas and tobacco.

The ESG filters keep out roughly 10% of the QQQ's holdings – mostly energy stocks, but also industrial Honeywell (HON) and communications-sector name Warner Bros. Discovery (WBD).

From a sector perspective, you lose a little exposure to several sectors, which is soaked up by tech – 60% of assets versus roughly 50% of QQQ's.

It's not a massive difference. But if you're looking for a slightly greener version of QQQ without any oil and gas exposure, QQMG does the trick.

Learn more about QQMG at the Direxion provider site.

USAA Nasdaq-100 Index Fund

• Assets under management: $4.1 billion 
• Expenses: 0.42%

Before we get on to a few other Nasdaq-100 ETFs, we should point out that the index isn't just for exchange-traded funds.

It might sound funny to call a $4 billion fund a "hidden gem." But it's not far from the truth: Victory Capital Management's USAA Nasdaq-100 Index Fund (USNQX, $31.47) is almost as old as the QQQ, launching in October 2000, but it boasts a small fraction of the ETF's assets. And it's not for lack of performance: USNQX ranks in the top 15% of funds in its category (large growth) in every meaningful long-term time frame.

The 0.42% in expenses are more than you'd pay for the Invesco QQQ Trust (and it's much higher than ETFs on average, for that matter). But it's roughly half the Morningstar category average expense of 0.81 %, so USNQX is at least relatively cheap ... which it should be, given that this is an index fund.

USAA Nasdaq-100 Index Fund's holdings and breakdown are virtually identical to the QQQ, which is to be expected. They both just track the index.

Learn more about USNQX at the Victory Capital provider site.

Invesco Nasdaq 100 Index Fund

• Assets under management: $12.5 million
• Expenses: 0.29% 

The Invesco Nasdaq 100 Index Fund (IVNQX, $25.72), which was launched alongside QQQM, allows investors to track the Nasdaq-100 Index in mutual fund form.

This fund, which will provide similar coverage as QQQ and QQQM, was created to allow Invesco to reach a broader audience. Specifically, it's aimed at retirement accounts, which often can't access ETFs.

Indeed: These are Class R6 shares, which are primarily intended for retirement plans and shareholders of omnibus intermediaries that meet certain standards, as well as for institutional investors. In short, it's unlikely you'll be able to access these via a traditional brokerage account. And if you could, you'd need a cool million dollars to kick things off.

Fortunately, your traditional brokerage account will have access to QQQ and QQQM, so it's not an issue.

Learn more about IVNQX at the Invesco provider site.

Invesco Nasdaq Next Gen/Future Gen ETFs

• Expenses: 0.15%

Call 'em sequels, call 'em spinoffs, but while the next three funds aren't traditional Nasdaq-100 ETFs, they're closely related and have picked up quite the following of their own.

First to market, in October 2020, was the Invesco Nasdaq Next Gen 100 ETF (QQQJ, $26.23). Think of this as the Nasdaq-100's junior varsity squad. While the QQQ ETF tracks the 100 largest Nasdaq non-financials, the Next Gen 100 ETF tracks the next 100 largest stocks, hence the name.

QQQJ is similar to QQQ in some ways, but different in others. For instance, like its older sister fund, QQQJ is heavy in tech which is tops at 35%, and communications and consumer discretionary stocks both have significant presences, at roughly 11%-12% each. What has set it apart from inception is a much larger position in healthcare (24% to QQQ's 7%) and industrials (10% to QQQ's 4%).

QQQJ is also less top-heavy than QQQ. The Invesco QQQ Trust's top 10 holdings make up 53% of the 100-stock fund's weight. But this "junior" fund dedicates only 18% of its assets to its top 10 stocks.

Since inception, the Next Gen's index has traded similarly to the Nasdaq-100, but with periods of clear outperformance and underperformance. It has also picked up $800 million in assets – enough success to warrant a couple more spinoff products.

In October 2021, Invesco launched the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG, $19.77), which is an ESG-screened version of the QQQJ. (We'll point out that the ESG screening doesn't have much of an impact at present, eliminating just five holdings.)

Then in October 2022, Invesco brought the Invesco NASDAQ Future Gen 200 ETF (QQQS, $30.78) to life – and no, it's not the next 100 stocks up after the Next Gen ETF. QQQS tracks the Nasdaq Innovators Completion Cap Index, which is made up of 200 small-cap stocks "with the most valuable patent portfolios relative to their total market value as deemed by Nasdaq." The index selects its holdings from the Nasdaq Composite, but cannot be Nasdaq-100 or Nasdaq Next Generation 100 stocks.

Learn more about these ETFs at Invesco: QQQJ | QQJG | QQQS

ProShares Inverse and Leveraged Nasdaq-100 ETFs

• Expenses: 0.95%

This last group of ETFs, for the most part, aren't for the faint of heart – and more accurately, they're not for buy-and-hold investors.

ProShares offers several ETFs that provide leveraged exposure to the Nasdaq-100 Index, as well as inverse exposure to the index.

"Leveraged" exposure typically means the fund produces multiple times the performance of an index on a daily basis. So, in the case of the ProShares Ultra QQQ (QLD, $44.03), you're getting 2x the daily performance of the Nasdaq-100 Index. That gives you the opportunity to double your gains … but also to double your losses. The ProShares UltraPro QQQ (TQQQ, $24.04) provides 3x positive exposure.

"Inverse" exposure means you're getting the inverse of an index's performance. So, let's say the Nasdaq-100 Index goes down 1% tomorrow, the ProShares Short QQQ (PSQ, $13.29) should gain 1% (minus expenses, of course).

You can combine the two ideas – leverage and inverse – via the ProShares UltraShort QQQ (QID, $20.90), which offers -2x exposure, and the ProShares UltraPro Short QQQ (SQQQ, $36.29), which is a -3x fund.

We've previously noted that the ProShares Short S&P500 ETF (SH), which provides inverse (-1x) exposure to the S&P 500, is a fairly safe and straightforward hedge against the market – making it one of the best bear market ETFs to buy – and the same goes with PSQ (-1x Nasdaq-100). If the market heads higher, these products naturally will lose value, but not at an accelerated rate like their leveraged brethren.

However, 2x and 3x products are best left to day traders and the pros. A wrong bet on these products can compound in a hurry, and generally are too heavy on risk for most individual investors.

Learn more about these inverse ETFs at ProShares: QLD | TQQQ | PSQ | QID | SQQQ