12 Best NASDAQ ETFs
In this article, we discuss 12 best NASDAQ ETFs. If you want to skip our detailed discussion on the performance of the NASDAQ index, head directly to 5 Best NASDAQ ETFs.
In the last 15 years, the S&P and Dow Jones indices have shown similar movement about 94% of the time, as monitored by CNBC. The S&P and NASDAQ have also exhibited synchronized movement about 92% of the time during the same period. However, in 2023, the NASDAQ has stood out by delivering a near 30% return. Meanwhile, the S&P has achieved a return of approximately 15%, and the Dow has lagged behind with a modest 5% gain as of August 18.
The recent remarkable performance of the NASDAQ can be attributed to the strong rally in tech and communications stocks. The major holdings of the index, including Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), have all achieved returns greater than 30% in 2023 so far. NVIDIA Corporation (NASDAQ:NVDA) notably stands out with an impressive gain of 218%. However, it's important to note that the flip side is true as well – when investors divest from tech stocks, the impact can be devastating. During the dotcom bubble burst from 2000 to 2002, the NASDAQ experienced a substantial decline of 78%, in contrast to a 49% drop in the S&P 500 and 34% in the Dow.
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The market capitalization of companies listed on the NASDAQ-100 has increased by close to $5 trillion since the beginning of this year. As indicated by past trends, the strong performance of the NASDAQ-100 so far suggests a positive outlook for the rest of 2023. The market's interest in generative AI has overshadowed potential negative headlines this year, such as recession fears, inflation, Fed rate hikes, geopolitical risks, debt-ceiling concerns, and regional bank failures. Larry Adam, chief investment officer at Raymond James, told Bloomberg Television:
“I still do like big tech. I do believe in technology continuing to reinvent itself — obviously with the latest addition being AI. That’ll continue to drive earnings.”
Similarly, Sundeep Gantori, equity strategist at UBS Global Wealth Management, commented in July 2023:
“We don’t believe the AI trend is a bubble, but advise investors to be selective on AI-related stocks after the strong year-to-date rally. From a positioning point of view, we recently closed our self-help theme as we see better risk-reward in mid-cycle industries (software, internet) and tech laggards.”
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As per the Nasdaq Index Research Team, most of the 107 tracked indexes displayed positive performance in July 2023, with 87% ending in the month green and the remaining 13% in losses. The average return for all indexes was 3.4%. The NASDAQ-100 index continued its five-month positive streak, gaining 3.8%. The top performer was the KBW Nasdaq Bank Index, rising by 11.4%, while the Dorsey Wright Healthcare Technical Leaders Index declined by 4.3%, ranking as the weakest performer. July displayed strength in technology, particularly artificial intelligence, along with US small and mid-cap stocks.
In this article, we discuss some of the best performing NASDAQ ETFs. These ETFs provide exposure to some of the top NASDAQ stocks including Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Meta Platforms, Inc. (NASDAQ:META).
Our Methodology
We chose ETFs listed on the NASDAQ exchange which offer exposure to large-, mid- and small-cap stocks in order to create a well-rounded list of the popular funds. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These NASDAQ ETFs have amassed significant gains in the last 5 years. The list is ranked in ascending order of the 5-Year performance of these ETFs as of August 18, 2023.
Photo by Pascal Bernardon on Unsplash
Best NASDAQ ETFs
12. Invesco BuyBack Achievers ETF (NASDAQ:PKW)
5-Year Performance as of August 18: 51.17%
Invesco BuyBack Achievers ETF (NASDAQ:PKW) seeks to track the price and yield performance of the NASDAQ US BuyBack Achievers? Index. This index consists of American company securities that have lowered their outstanding shares by 5% or more in the last year. The ETF was introduced on December 20, 2006. As of August 15, Invesco BuyBack Achievers ETF (NASDAQ:PKW) holds 315 stocks in its portfolio and offers an expense ratio of 0.61%. It is one of the best NASDAQ ETFs to watch.
Comcast Corporation (NASDAQ:CMCSA) is the largest holding of Invesco BuyBack Achievers ETF (NASDAQ:PKW). It is a media and technology company, with its operations divided into Residential Connectivity & Platforms, Business Services Connectivity, Media, Studios, and Theme Parks segments. On July 27, Comcast Corporation (NASDAQ:CMCSA) reported a Q2 non-GAAP EPS of $1.13 and a revenue of $30.51 billion, outperforming Wall Street estimates by $0.15 and $380 million, respectively.
According to Insider Monkey’s second quarter database, 66 hedge funds were long Comcast Corporation (NASDAQ:CMCSA), compared to 68 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the leading position holder in the company, with 32.4 million shares worth $1.3 billion.
In addition to Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Meta Platforms, Inc. (NASDAQ:META), Comcast Corporation (NASDAQ:CMCSA) is one of the best NASDAQ stocks to buy.
ClearBridge Multi Cap Growth Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q4 2022 investor letter:
“That balance served the Strategy well throughout the year, enabling outperformance against the benchmark in all four quarters. Results in the last three months were driven by a long-time media position in Comcast Corporation (NASDAQ:CMCSA), which we consider a durable compounder due to its consistent revenue growth and free cash flow generation. Comcast shares saw a snapback after a difficult first half of the year caused by cord cutting in its cable business and slowing subscriber growth in its broadband business. A flexible balance sheet and strong cash generation enabled the company to repurchase shares during the selloff earlier in the year.”
11. Direxion NASDAQ-100 Equal Weighted Index Shares (NASDAQ:QQQE)
5-Year Performance as of August 18: 59.02%
Direxion NASDAQ-100 Equal Weighted Index Shares (NASDAQ:QQQE)’s primary objective is to achieve investment outcomes that mirror the NASDAQ-100 Equal Weighted Index, excluding fees and costs. The ETF was introduced on March 21, 2012, and features an expense ratio of 0.35%. Direxion NASDAQ-100 Equal Weighted Index Shares (NASDAQ:QQQE) is one of the best NASDAQ ETFs to buy.
Microsoft Corporation (NASDAQ:MSFT) is the largest holding of Direxion NASDAQ-100 Equal Weighted Index Shares (NASDAQ:QQQE). On June 14, Microsoft Corporation (NASDAQ:MSFT) declared a quarterly dividend of $0.68 per share, in line with previous. The dividend is distributable on September 14, to shareholders of record on August 17.
According to Insider Monkey’s second quarter database, Microsoft Corporation (NASDAQ:MSFT) was part of 300 hedge fund portfolios, up from 289 in the prior quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 39.2 million shares worth $13.3 billion.
Third Point Management made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2023 investor letter:
“While our gross equity exposure is still modest (below 100% on the long side), we have increased our nets to 70% as of this writing and 77% on a beta adjusted basis. About 45% of that net long exposure is composed of direct and indirect AI beneficiaries trading at reasonable valuations. We have sized up our investments in certain cloud software businesses including Microsoft Corporation (NASDAQ:MSFT), a clear AI winner as a result of its rapidly growing Azure cloud business, upside from applying AI features to its core Office products, investment in Open AI, and ability to provide AI services to other companies (for example, Microsoft holds a stake in one of our portfolio companies, LSE, which it is also assisting in harnessing greater value in its data via AI).”
10. Principal Quality ETF (NASDAQ:PSET)
5-Year Performance as of August 18: 59.17%
Principal Quality ETF (NASDAQ:PSET) aims for long-term capital growth by primarily investing in stocks. It employs an exclusive quantitative model to choose high-quality, growth-oriented, and strong-priced equity securities from the S&P 500 Index or S&P 400 Index. The fund mainly invests in the healthcare sector. Principal Quality ETF (NASDAQ:PSET) was established on March 21, 2016. As of July 31, 2023, the fund holds 67 stocks in its portfolio and features an expense ratio of 0.15%.
Apple Inc. (NASDAQ:AAPL) is the leading stock in Principal Quality ETF (NASDAQ:PSET)’s portfolio. On August 3, Apple Inc. (NASDAQ:AAPL) announced financial results for its third fiscal quarter ended July 1, 2023. The company reported a GAAP EPS of $1.26, beating market estimates by $0.07. The revenue of $81.8 billion came in line with Wall Street consensus.
According to Insider Monkey’s second quarter database, 135 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL), compared to 131 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 915.5 million shares worth $177.6 billion.
Choice Equities Capital Management made the following comment about Apple Inc. (NASDAQ:AAPL) in its second quarter 2023 investor letter:
“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)
Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.
On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…” (Click here to read the full text)
9. Invesco RAFI Strategic US ETF (NASDAQ:IUS)
5-Year Performance as of August 18: 60.34%
Invesco RAFI Strategic US ETF (NASDAQ:IUS) follows the performance of the Invesco Strategic US Index. This index is formulated to track large high quality US companies. Invesco RAFI Strategic US ETF (NASDAQ:IUS) was launched on September 12, 2018. As of August 15, 2023, the fund contains 557 stocks in its portfolio and has an expense ratio of 0.19%. Invesco RAFI Strategic US ETF (NASDAQ:IUS) is one of the best NASDAQ ETFs to invest in.
One of the top holdings of Invesco RAFI Strategic US ETF (NASDAQ:IUS) is Alphabet Inc. (NASDAQ:GOOGL). On July 25, Alphabet Inc. (NASDAQ:GOOGL) reported a Q2 EPS of $1.44, beating market consensus by $0.10. The revenue of $74.60 billion also exceeded Street expectations by $1.85 billion.
According to Insider Monkey’s second quarter database, Alphabet Inc. (NASDAQ:GOOGL) was part of 204 hedge fund portfolios, same as the previous quarter. Harris Associates is the biggest stakeholder of the company, with 26.8 million shares worth $3.2 billion.
Weitz Partners III Opportunity Fund made the following comment about Alphabet Inc. (NASDAQ:GOOGL) in its second quarter 2023 investor letter:
“The year-to-date’s top contributors Microsoft Corp. (MSFT) and Google parent Alphabet Inc. (NASDAQ:GOOGL) (also a top quarterly contributor) have generated an enormous volume of AI-centric headlines. Both are at the vanguard of introducing AI-powered technologies into consumer-facing products, most notably their respective search engine. We trimmed several of the year’s winners on strength, including Meta, Microsoft, Alphabet, CoStar Group, Inc. (CSGP), and CarMax.”
8. Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ)
5-Year Performance as of August 18: 68.13%
Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ) exclusively follows companies listed on the NASDAQ. The benchmark measure for this ETF is the NASDAQ Composite Index. Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ) was launched on September 25, 2003. Presently, it has $4.99 billion in assets under management, along with an expense ratio of 0.21%. It is one of the top NASDAQ ETFs to buy.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the largest holdings of Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ). On August 3, Amazon.com, Inc. (NASDAQ:AMZN) reported a Q2 EPS of $0.65 and a revenue of $134.38 billion, outperforming Wall Street expectations by $0.31 and $3.04 billion, respectively.
Among the hedge funds tracked by Insider Monkey, 278 funds were bullish on Amazon.com, Inc. (NASDAQ:AMZN) at the end of June 2023, compared to 243 funds in the earlier quarter. Rajiv Jain’s GQG Partners is a prominent stakeholder of the company, with 15.4 million shares worth just over $2 billion.
7. Vanguard Russell 1000 Growth Index Fund (NASDAQ:VONG)
5-Year Performance as of August 18: 75.87%
Vanguard Russell 1000 Growth Index Fund (NASDAQ:VONG) focuses its investments on stocks found within the Russell 1000 Growth Index. The index mainly consists of growth stocks from prominent U.S. corporations. The ETF was created on September 20, 2010. Currently, Vanguard Russell 1000 Growth Index Fund (NASDAQ:VONG)’s portfolio includes 442 stocks, and it maintains an expense ratio of 0.08%. It is one of the best NASDAQ ETFs to invest in.
NVIDIA Corporation (NASDAQ:NVDA) is one of the leading stocks in Vanguard Russell 1000 Growth Index Fund (NASDAQ:VONG)’s portfolio. On August 17, Citi analyst Atif Malik maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) and a price target of $520 on the shares. The analyst anticipates favorable Q2 results in the company's data center segment given the robust demand for artificial intelligence.
According to Insider Monkey’s second quarter database, 175 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), up from 132 funds in the preceding quarter. Rajiv Jain’s GQG Partners is a prominent stakeholder of the company, with approximately 14 million shares worth $5.89 billion.
Saltlight Capital made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) has become the de-facto AI name in the market (rightly so) and has delivered remarkable performance for us. We have been gradually trimming our investment to, what we call, an ‘optionality’ size position as the stock price has dramatically gone up. Conditions are chalk and cheese to when we first purchased our investment.
Recent news makes us think twice: PyTorch 2.0, the machine learning framework recently announced support for AMD GPUs which is a negative for NVIDIA.
For many readers, this may be getting into the weeds but in our May 2021 letter, we discussed one aspect of NVIDIA’s competitive edge – its proprietary CUDA software. Operating as the interface between their GPUs and machine learning (ML) libraries, CUDA has become the standard layer in the AI stack to enable parallelised processing, a critical function for complex neural network models. Competing, cheaper, GPUs with inferior working libraries struggled to gain meaningful traction because the early versions of machine learning libraries (PyTorch and TensorFlow) did not directly interface with them. This created friction for developers and effectively blocked cheaper competitor GPUs from handling machine learning workloads….” (Click here to read the full text)
6. First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR)
5-Year Performance as of August 18: 88.06%
First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR) is one of the best NASDAQ ETFs to buy. First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR) aims to achieve investment outcomes that align with the overall price and yield performance of the Richard Bernstein Advisors American Industrial Renaissance? Index. This index tracks small and medium-sized American companies in the industrial and community banking fields. First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR) was introduced on March 10, 2014, and presently holds a portfolio of 49 stocks. Its expense ratio is 0.70%.
Sterling Infrastructure, Inc. (NASDAQ:STRL) holds the biggest position in First Trust RBA American Industrial RenaissanceTM ETF (NASDAQ:AIRR)’s portfolio. Sterling Infrastructure, Inc. (NASDAQ:STRL) is involved in e-infrastructure, transportation, and construction solutions in the United States. On August 7, Sterling Infrastructure, Inc. (NASDAQ:STRL) reported a Q2 GAAP EPS of $1.27, beating Wall Street estimates by $0.34. The revenue increased 13.1% year-over-year to $522.3 million.
According to Insider Monkey’s second quarter database, 16 hedge funds were bullish on Sterling Infrastructure, Inc. (NASDAQ:STRL), compared to 17 funds in the last quarter. Richard Driehaus’ Driehaus Capital is the largest stakeholder of the company, with 364,316 shares worth $20.3 million.
Like Intel Corporation (NASDAQ:INTC), Broadcom Inc. (NASDAQ:AVGO), and Meta Platforms, Inc. (NASDAQ:META), Sterling Infrastructure, Inc. (NASDAQ:STRL) is one of the top NASDAQ stocks to buy.
Here is what Wasatch Micro Cap Value Fund has to say about Sterling Infrastructure, Inc. (NASDAQ:STRL) in its Q1 2021 investor letter:
“The first is Sterling Construction Co., Inc. (STRL), which specializes in higher-margin work on highways, bridges, airports, water and sewer facilities, light-rail projects, flat concrete for subdivisions and foundations for data centers. For companies such as Sterling, we like to look at a metric known as EV (enterprise value) to EBITDA. Sterling’s EV to EBITDA ratio is about 7, which we think is inexpensive compared to competitors. Moreover, we believe the stock could benefit not only from increased construction business but also from investors’ willingness to accept a much higher EV to EBITDA ratio.”
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Disclosure: None. 12 Best NASDAQ ETFs is originally published on Insider Monkey.