Ride the Relentless Nasdaq Rally With These ETFs

Sweta Jaiswal, FRM
·5-min read

In the wake of rising cases in the United States, the ongoing stimulus talks for coronavirus relief package have been keeping investors on the edge. Meanwhile, major technology companies’ resilience to the coronavirus crisis is supporting the tech-heavy index. The index advanced 1% in yesterday’s trading session, to another all-time high above 11,000 and also its seventh consecutive positive session. The upside in the index was largely backed by top tech stocks like Apple (AAPL), which was up 3.5%, Facebook’s (FB) increase of 6.5% as well as Netflix (NFLX) and Alphabet’s (GOOGL) gains of more than 1% along with Microsoft’s (MSFT) 1.6% rise.

The earnings releases of major tech companies were strong amid the pandemic times. Facebook, Amazon, Apple and Alphabet delivered quarterly results which beat estimates this earnings season.

Will the Rally Stay?

The second half of 2020 is expected to keep facing the brunt of the pandemic as the second wave of the outbreak is gathering steam.In the current scenario, the rising work-from-home and online shopping trends, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With the new trends making way, these major technology stocks are expected to continue to gain on rising demand for their products and services.

Strikingly, even as the rebooting of the U.S. economy happens in phases and social-distancing restrictions are being eased, people are increasingly opting for contactless operations. It’s largely because the pandemic brought about some changes in lifestyle and influenced Americans’ preferences.

Evidently, cloud computing has emerged as a key technology in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and helping employees across the world collaborate while working. The work-from-home model has bumped up sales of PCs, laptops and other kind of computer peripherals.

Further, the semiconductor industry received a boost from the coronavirus crisis on solid demand for memory chips and other semiconductor products. Notably, stay-at-home and physical-distancing mandates are spurring demand for data center and gaming.

More and more people are spending time at home, in line with social-distancing guidelines due to the pandemic woes. As a result, they are resorting to streaming platforms like Netflix, Amazon Prime or Disney+ or turning to social media platforms like Facebook and Twitter for in-house entertainment.

ETFs to Gain

Investors seeking to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the afore-mentioned trends stay.

Invesco QQQ QQQ — up 1.3% on Thursday

This ETF provides exposure to 103 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 ETF in the large-cap space, with AUM of $126.84 billion and average daily volume of around 54.7 million shares. It charges investors 20 bps in annual fees. The fund sports a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: Best & Worst ETF Areas of July).

First Trust NASDAQ 100 Equal Weight QQEW — up .04%

Holding 104 stocks, this fund provides equal exposure to stocks of the Nasdaq-100 Index. It has amassed $912.3 million in its asset base, while it trades in lower volumes of nearly 111,000 shares a day on average. QQEW carries a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: Expect Further Rally in Nasdaq-100 ETFs as Moderna Joins).

Fidelity Nasdaq Composite Index Tracking Stock ONEQ — up 0.9%

This ETF tracks the Nasdaq Composite Index, holding a broad basket of 996 stocks. It has AUM of $3.01 billion and average daily volume of around 76,000 shares. The expense ratio comes is 0.21%. The product carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: Big Tech Stocks Top Trillion-Dollar Each: ETFs to Bet On).

ProShares Ultra QQQ QLD — up 2.5%

Investors seeking to make big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance and sees nearly 2.1 million shares trading in average daily volume. The fund has AUM of $3.09 billion and charges 95 bps in fees and expenses.

ProShares UltraPro QQQ TQQQ — up 3.8%

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 QLD. The fund has managed AUM of $7.42 billion and sees nearly 45.1 million shares trading in average daily volume (read: A Quick Guide to 10 Most Popular Leveraged ETFs).

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Invesco QQQ (QQQ): ETF Research Reports
 
First Trust NASDAQ100 Equal Weighted ETF (QQEW): ETF Research Reports
 
ProShares Ultra QQQ (QLD): ETF Research Reports
 
Fidelity NASDAQ Composite Index Tracking Stock Fund (ONEQ): ETF Research Reports
 
ProShares UltraPro QQQ (TQQQ): ETF Research Reports
 
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