6 Top Nasdaq ETFs For 2024

The Nasdaq Composite has likely made a few millionaires in recent years. While the index was down 33% in 2022, it’s grown between 21% and 43% in every other year since 2019.

Investing in a Nasdaq ETF is a simple way to add some of that growth potential to your own portfolio. If you can withstand its volatility, it offers a gateway to investing in some of the most innovative and groundbreaking companies of our time. Read on to learn more about Nasdaq ETFs, including which ones look promising for 2024 and beyond.

Breaking Down Nasdaq ETFs

Nasdaq exchange-traded funds are investment funds that base their portfolio strategy on a Nasdaq index. Nasdaq indexes are different groupings of stocks that are listed on the Nasdaq exchange.

Understanding Nasdaq ETFs

Understanding Nasdaq ETFs begins with learning about the indexes they replicate. These indexes include the Nasdaq Composite, Nasdaq-100, Nasdaq-100 Equal Weighted Index, Nasdaq Next Generation 100 and the Nasdaq-100 ESG Index.

• Nasdaq Composite includes all stocks listed on the Nasdaq exchange. There are more than 3,500 constituents, which include Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN). This index is weighted by market capitalization, which means larger companies have a proportionally larger influence over index performance. Technology stocks comprise nearly 60% of the Nasdaq Composite.
• Nasdaq-100 includes the 100 largest non-financial stocks on the Nasdaq. This index uses a modified weighting system that relies on two measures of market capitalization. The Nasdaq-100 is rebalanced quarterly.
• Nasdaq-100 Equal Weighted Index includes the Nasdaq-100 stocks, weighted equally rather than by market capitalization.
• Nasdaq Next Generation 100 includes the 101th to 200th largest stocks on the Nasdaq, in terms of market capitalization. This index is also rebalanced quarterly.
• Nasdaq-100 ESG Index screens Nasdaq-100 constituents on ESG criteria. ESG stands for environmental, social and governance; these are the three pillars of sustainability tracking and reporting. The Nasdaq-100 ESG index is rebalanced quarterly in March, June, September and December.

Some Nasdaq ETFs look to replicate the performance of their underlying index, while others modify the strategy in some way. Those modifications can include shorting the index or using leverage.

• Shorting the index: A short position is a bet the asset will decline. Investors who believe Nasdaq stocks are poised to lose value could open a short position with an inverse Nasdaq ETF. Inverse ETFs gain when the benchmark index falls.
• Use of leverage: Leveraged index ETFs use debt to amplify the returns of the underlying index. This is risky because the amplification occurs whether the index goes up or down.

Advantages Of Nasdaq ETFs

People invest in Nasdaq ETFs because they provide diversified access to high-growth Nasdaq stocks. The best of Nasdaq ETFs also have low expense ratios, which means investors don’t pay too much for the convenience of a fund vs. individual stocks.

The growth story of the Nasdaq has come into its own in the last 20 years. Since January 2000, the Nasdaq Composite has grown 283% while the S&P 500 grew 236%. In the last 10 years, that performance gap has widened. The Nasdaq Composite expanded 265% compared to 168% for the S&P 500.

Those gains have not been linear, of course. For example, the composite was down more than 30% in 2022. Nasdaq stocks, even the biggest of them, can be volatile. For that reason, Nasdaq exposure—and even through a diversified Nasdaq ETF—requires a good dose of risk tolerance.

Methodology For These Picks

The best Nasdaq ETFs for 2024 are funds that pursue long positions in a Nasdaq index without leverage. Inverse and leveraged ETFs may suit some specific investing goals, but they’re too risky to be included here.

Additionally, all six ETFs below have expense ratios no higher than 0.35%. A fund’s expense ratio quantifies what investors are charged annually for the fund’s administrative costs. A ratio of 0.35% equates to $35 per year for every $10,000 invested.

A lower expense ratio keeps more of your money invested in the underlying assets, which contributes to higher returns over time.

The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download one of Forbes’ most popular and widely anticipated reports, 12 Best Stocks To Buy for 2024.

The 6 Best Nasdaq ETFs For 2024

The table below introduces the six best ETFs for Nasdaq exposure, ordered from largest to smallest.

Invesco QQQ (QQQ)

• Date launched: March 10, 1999
• One-year NAV return: 54.7%
• Annualized NAV return since inception: 9.5%
• Number of holdings: 101

6 Top Nasdaq ETFs For 2024