Best Nasdaq ETFs for 2024

The NASDAQ is the second largest stock exchange by trading volume worldwide, beaten only by the New York Stock Exchange. This article explains what NASDAQ ETFs are along with the pros and cons of investing in them, as well as provides a list of NASDAQ ETFs to watch this year.

Key Takeaways

• The NASDAQ is a stock exchange based in New York which lists over 3,000 companies. Often when investors mention the NASDAQ, they refer to the NASDAQ 100, which are the 100 largest companies listed on the NASDAQ Stock Exchange.
• The total market capitalisation of all the equities on the NASDAQ is over $20 trillion, featuring a total trading volume of more than $1.8 trillion so in 2023. 
• NASDAQ ETFs are Exchange-Traded Funds that investors can buy to gain exposure to many companies on the NASDAQ through one transaction.

What are NASDAQ ETFs?

NASDAQ ETFs are Exchange-Traded Funds that limit themselves to companies listed on the NASDAQ Exchange. The NASDAQ Exchange is a stock exchange based in New York City, and the largest stock exchange in the United States based on volume. The NASDAQ features many technology companies like Apple and Microsoft.

An ETF is a fund that is traded on a stock exchange. Investors can buy ETFs at their broker of choice, and they cover a variety of different themes. An ETF can be thought of as a collection of different equities that are put together in a basket by an investment management company, in which you can buy shares of. By buying the ETF, the investor buys a small part of the performance of each stock within the ETF.

It is important to note the distinction between the NASDAQ and the NASDAQ 100. Oftentimes ‘the NASDAQ’ is used by investment analysts as a shorthand for the NASDAQ 100, which are the largest 100 stocks listed on the NASDAQ Exchange. The NASDAQ 100 is therefore a stock market index.

The NASDAQ itself, however, is just a stock exchange, which lists over 3,000 different companies. Investors researching NASDAQ ETFs should therefore note whether a given ETF restricts itself to the NASDAQ 100, or focuses on the NASDAQ as a whole.

Best NASDAQ ETFs to Watch

Below is a list of some of the best NASDAQ ETFs to watch. It should be noted that any investment decision should always be based on personal factors like risk appetite and the investor’s financial situation. This list of the best NASDAQ ETFs is subjective, and investors would do well to perform their own research.

1. iShares NASDAQ 100 UCITS ETF – Fund that invests in the 100 largest stocks on the NASDAQ Stock Exchange
2. First Trust NASDAQ 100 Technology Index Fund ETF – Equally-weighted fund that invests in just the technology companies in the NASDAQ 100
3. First Trust NASDAQ Technology Dividend Index Fund ETF – Fund that invests in dividend-paying companies that are listed on the NASDAQ stock exchange

iShares NASDAQ 100 UCITS ETF 

iShares ETFs are issued by BlackRock, an asset manager with around $9 trillion in assets under management. The iShares NASDAQ 100 UCITS ETF invests in the largest 100 non-financial companies listed on the NASDAQ exchange. As the NASDAQ features many tech companies, the capital in this fund is invested roughly 50% into the IT sector.

The top 10 holdings of the iShares NASDAQ 100 UCITS ETF in order of weighting are: Apple Inc (~11.2%), Microsoft Corp (~10.2%), Amazon Com Inc (~5.6%), NVIDIA Corp (~4.3%), Meta Platforms Inc Class A (~3.8%), Broadcom Inc (~3%), Alphabet Inc Class A (~3%), Alphabet Inc Class C (~3%), Tesla Inc (~2.9%), and Adobe Inc (~2.2%).

The main economic sectors this fund invests in are IT (~50%), communications (~16%), and luxury consumer goods (~14%). The rest of the fund's capital is spread over healthcare (~7%), basic consumer goods (~6%), and industrials (~5%), among other sectors.

First Trust NASDAQ 100 Technology Index Fund ETF

The First Trust NASDAQ 100 ETF is issued by First Trust, an investment management company headquartered in the State of Illinois in the United States. This ETF specifically tracks the companies in the NASDAQ that are classified as technology companies according to the Industry Classification Benchmark (ICB). As such, this fund is entirely invested in the information technology sector.

The top 10 holdings in the First Trust NASDAQ 100 Technology Index ETF are CrowdStrike Holdings Inc Class A (~3.6%), PDD Holdings Inc (~3.5%), Zscaler Inc (~3.14%), Advanced Micro Devices Inc (~3.1%), Palo Alto Networks Inc (~3.1%), Datadog Inc Class A (~2.9%), Synopsys Inc (~2.9%), Qualcomm Inc(~2.9%), KLA Corporation (~2.9%), and Adobe Inc (~2.9%).

The allocations are all of comparable size because this is an equally weighted fund, meaning that each company in the index is invested in the same amount of capital. Rebalancing of the assets occurs four times a year.

All of this NASDAQ ETF’s capital is allocated to IT companies, with the following sub-sectors: software (~41%), semiconductors (~34%), production technology equipment (~11%), and consumer digital services (~9%). Computer hardware and computer services account for the remaining 5% of capital.

With Admirals, you can trade the First Trust NASDAQ 100 Technology Index ETF CFD. CFDs, or contracts for difference, are derivative contracts that track the underlying price of an asset. This enables investors to trade long and short using leverage. Learn more in The CFD Trading Guide.

First Trust NASDAQ Technology Dividend Index Fund ETF

The First Trust NASDAQ Technology Dividend Index ETF focuses on technology companies listed on the NASDAQ Stock Exchange that specifically pay dividends. The inclusion criteria are complicated, featuring among other things a minimum market capitalisation of $500 million, a minimum daily trading volume of $1 million, and a dividend payment for the past 12 months with a yield of at least 0.5%.

The top 10 holdings in the First Trust NASDAQ Technology Dividend Index ETF are: Microsoft Corp (~8.9%), International Business Machines Corp (~8.6%), Broadcom Inc (~8%), Texas Instruments Inc (~7.3%), Oracle Corp (~6.9%), QUALCOMM Inc (~4.5%), Analog Devices Inc (~3.3%), Motorola Solutions Inc (~2.2%), Rogers Communications Inc Class B (~2.2%), and Verizon Communications Inc (~2.1%).

The main economic sectors represented in this NASDAQ ETF are semiconductors and semiconductor equipment (~36%), software (~20%), IT services (~10%), and diversified telecommunication services (~7%). The rest of the fund’s capital is spread in smaller amounts over several other sectors, including technology hardware, storage & peripherals (~7%), communications equipment (~6%), and wireless telecommunication services (~4%), and other sub-sectors.

With Admirals, you can trade the First Trust NASDAQ Technology Dividend Index ETF CFD. 

How to Invest in NASDAQ ETFs

With Admirals, you can invest in real stocks and ETFs, as well as trade CFDs on stocks and ETFs, with the following commissions:

• UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
• US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
• France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.

You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:

1. Open an account with Admirals.
2. Click on Trade on one of your live or demo trading accounts to open the web platform.
3. Search for your symbol at the top of the search window.
4. Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.

Investing in NASDAQ ETFs: Pros & Cons

The NASDAQ 100 is a well-known index of the largest 100 technology companies listed on the NASDAQ Exchange. Investors interested in adding technology companies to their portfolio may consider NASDAQ ETFs, as most large American tech companies like Apple, Microsoft, NVIDIA, and even Tesla are listed on the NASDAQ.

Technology is not the only sector represented on the NASDAQ, however. Other sectors like healthcare, consumer services, and biotechnology also account for a certain number of companies listed on the NASDAQ. Buying into a NASDAQ ETF can be a way to add a level of diversification to a portfolio.

However, technology companies can be notoriously volatile and are highly sensitive to changes in interest rate policy. While there are times this can lead to returns which are above the market average, there will be times when these stocks will be hit the hardest such as in a recession or higher interest rate environment. Investors who invest in NASDAQ ETFs should be mindful of their risk appetite.

Another factor to take into consideration is that NASDAQ ETFs are strongly focused on technology. The amount of diversification a NASDAQ 100 ETF provides is therefore less than the diversification of a general market index like the S&P 500, which invests more broadly in many sectors.

Continue Reading:

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• The CFD Trading Guide

FAQs on Best NASDAQ ETFs

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