The ETF That's Too Good to Be True

Saturday 5th of April 2025 08:15:00

ETFs Look Like a Clever Way to Invest in the Nasdaq-100

Investors looking to tap into the growth potential of the tech-heavy Nasdaq-100 Index may want to consider exchange-traded funds (ETFs) that track the benchmark. ETFs offer a convenient and cost-effective way to gain exposure to the Nasdaq-100, which is comprised of the 100 largest and most actively traded non-financial stocks listed on the Nasdaq stock market.

The Nasdaq-100 Index is home to some of the world's most innovative and influential companies, including Amazon, Facebook, Google, Microsoft, and Tesla, among others. As such, it's no surprise that the index has consistently outperformed the broader market over the long term.

One ETF that allows investors to tap into the Nasdaq-100's growth potential is the Invesco QQQ ETF (QQQ). This ETF tracks the Nasdaq-100 Index and holds all the same securities, giving investors a diversified portfolio of the largest and most actively traded non-financial stocks on the Nasdaq.

The QQQ ETF has a low expense ratio of just 0.20%, making it an attractive option for investors looking to keep costs low. The ETF also offers a convenient trading structure, allowing investors to buy and sell shares throughout the trading day.

Another ETF option for investors looking to gain exposure to the Nasdaq-100 is the First Trust Nasdaq-100 Equal Weighted ETF (FND). This ETF uses an equal-weighted approach to give each component stock the same weight in the portfolio, rather than the market-capitalization-weighted approach used by the QQQ ETF.

The FND ETF has a slightly higher expense ratio of 0.52%, but it offers a unique approach to investing in the Nasdaq-100. The ETF also has a lower turnover rate than the QQQ ETF, which can help reduce trading costs and minimize tax liabilities.

In conclusion, ETFs like the Invesco QQQ ETF and the First Trust Nasdaq-100 Equal Weighted ETF offer a convenient and cost-effective way for investors to gain exposure to the Nasdaq-100 Index. With their diversified portfolios and low expense ratios, these ETFs can be a great way to tap into the growth potential of the tech-heavy index.