Join the Nasdaq Rally With These ETFs
Here we highlight a few ETFs that can gain from the strength in the tech-heavy Nasdaq Composite.
The Nasdaq Composite Index is having a solid run on the bourses this month, with gains of 3.1%. It has outperformed the S&P 500 and the Dow Jones Industrial Average indices gains of 2.6% and 1.4%, respectively, so far in August. Notably, the tech-heavy index rose 1.2% on Aug 27, hitting a new record and closing at 15,129.50.
Investors are relieved about Fed’s intention to not hike the interest rates in the near term. Also, Fed Chairman Jerome Powell seems to have prepared the market for tapering its $120 billion in monthly bond purchases this year.
Powell reportedly said that “The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” as mentioned in a CNBC article.
The FDA granting the first full U.S. approval to Pfizer (PFE)/BioNTech’s (BNTX) coronavirus vaccine, Comirnaty (BNT162b), has also boosted investors’ confidence in some reopening bets like airlines, travel and leisure and casino players.
The full FDA approval is expected to increase the confidence for imposing vaccine mandates. Also, the unvaccinated population is now more likely to opt for vaccinations. According to a CNBC article, the Kaiser Family Foundation survey reflected that three in 10 unvaccinated adults were more likely to get jabbed if one of the vaccines received full approval.
The market participants are also upbeat about the chances of peaking delta variant cases. In this regard, Fundstrat’s Tom Lee has said that “We realize equity markets have been choppy and the wide variance of perspective means investors do not have an easy consensus. But our central case remains that we are shifting further into full risk-on, with an ‘everything rallies’ into year-end. The cadence of incoming data has improved in the past few days, the most notable being the apexing of COVID-19 cases in a number of states,” as mentioned in a CNBC article.
Going on, U.S. GDP grew at a 6.5% annualized rate in the second quarter of 2021, per the Commerce Department’s first estimate (per a CNBC article). However, the metric lagged the Dow Jones estimate of 8.4%. Despite missing the estimate, in absolute terms, U.S. GDP came in at $19.4 trillion for second-quarter 2021, exceeding $19.2 trillion recorded in fourth-quarter 2019 (the last quarter before the outbreak of coronavirus).
ETFs to Gain
Technology continues to play an instrumental role in the ongoing COVID-19 uncertainty by helping people maintain safe-distancing norms. Certain ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming as well as soaring video game sales. The pandemic is also a boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.
Investors aiming to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the aforementioned trends stay:
ProShares UltraPro QQQ TQQQ
For a more bullish approach, TQQQ could be an excellent choice. It also tracks the Nasdaq-100 Index but offers thrice the returns of the daily performance with the same expense ratio of 0.95%. The fund managed AUM of $14.22 billion (read: 5 Leveraged/Inverse ETFs Sizzling This Summer).
ProShares Ultra QQQ QLD
Investors seeking big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance. The fund has AUM of $5.33 billion. It charges 95 basis points (bps) in fees and expenses.
Invesco QQQ QQQ
This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $189.73 billion. It charges investors 20 bps in annual fees (read: Chip Shortages: ETF Winners and Losers).
Fidelity Nasdaq Composite Index ETF ONEQ
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,022 stocks. It has AUM of $4.50 billion. The expense ratio comes in at 0.21% (read: ETFs to Gain on Renewed Market Optimism).
First Trust NASDAQ-100 Equal Weighted Index Fund QQEW
Holding 102 stocks, this fund replicates as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Equal Weighted Index. It amassed $1.35 billion in its asset base with an expense ratio of 58 basis points.
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Invesco QQQ (QQQ): ETF Research Reports
ProShares Ultra QQQ (QLD): ETF Research Reports
ProShares UltraPro QQQ (TQQQ): ETF Research Reports
Fidelity Nasdaq Composite Index ETF (ONEQ): ETF Research Reports
First Trust NASDAQ100 Equal Weighted ETF (QQEW): ETF Research Reports
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