For many new investors, Nasdaq is synonymous with being one of the world's largest operators of equity bourses.
That's certainly true, but more experienced investors are familiar with the potency and long-term out-performance offered by the Nasdaq-100 Index (NDX), which is one of the world's most widely followed equity benchmarks. Still, even more experienced investors, particularly those knowledgeably of index funds and exchange-traded funds, know Nasdaq issues an array of other indexes beyond NDX.
While NDX commands most of the attention, and rightfully so given its stellar long-term track record, there are some other indexes that make for interesting and compelling “Nasdaq ETFs.”
With 2022 here, and as many investors are considering portfolio adjustments and alterations, here are a couple of Nasdaq ETFs that could be worth following in the new year.
1. Fidelity Nasdaq Composite Index ETF (ONEQ)
The Fidelity Nasdaq Composite Index ETF (ONEQ) is one of the more unheralded Nasdaq ETFs, and it's the oldest ETF in the Fidelity stable. It tracks the Nasdaq Composite Index (COMP), which is a broader representation of Nasdaq-listed equities. That benchmark also has its own enviable track record.
“On a price-return basis, the Nasdaq Composite has increased by 536.7% since the end of 2009 (as of September 30, 2021), trailing the performance of the Nasdaq-100 but still significantly outperforming the returns of the S&P 500 (up 286.3%) as well as the MSCI World Index (157.3%),” according to Nasdaq research.
Like NDX, COMP is tech-heavy, but the latter features more healthcare exposure and some allocations not found in NDX.
“In terms of overall sector exposures, the Nasdaq Composite is slightly less concentrated in Technology than the Nasdaq-100, with a weight of 48.4%. Health Care is one of the larger sector exposures, as is Financials (which are methodologically excluded from the Nasdaq-100),” adds Nasdaq.
2. First Trust Nasdaq Cybersecurity ETF (CIBR)
The First Trust Nasdaq Cybersecurity ETF (CIBR) follows the Nasdaq CTA Cybersecurity Index and is the oldest ETF in what's an increasingly prominent category. On a seemingly weekly basis, the relevance of cybersecurity is reaffirmed.
“Cybercrime has been one of the most prominent storylines throughout 2021, with several highly publicized cyberattacks," according to First Trust research. "These were not limited to high-tech industries. They included targets such as a critical oil pipeline in the southeastern U.S., a meatpacking plant in Minnesota, a chain of grocery stores in the U.K., gas stations in Iran, and many others."
Aside from the obvious catalysts of cyberattacks, the CIBR thesis draws support from the intersection of cybersecurity with other growing, disruptive technologies.
“In our view, the ongoing popularity of these trends will likely be accompanied by a heightened demand for cybersecurity solutions," adds First Trust. "But digital connectivity—supported by cloud computing, 5G mobile networks, the internet-of-things, and many other technological advances—continues to grow more pervasive in nearly all industries."
3. Invesco ESG Nasdaq Next Gen 100 ETF (QQJG)
The Invesco ESG Nasdaq Next Gen 100 ETF (QQJG) is one of the newer Nasdaq ETFs and with environmental, social, and governance (ESG) taking off, it could be at the right place at the right time.
QQJG, which is about two months old, adds ESG to the Nasdaq Next Generation 100 ESG Index, the training ground for stocks angling for promotion to NDX. Data indicates that QQJG could be one of 2021's best-timed rookie ETFs.
“Global ESG assets are on track to exceed $53 trillion by 2025, according to Bloomberg Intelligence, representing more than a third of the $140.5 trillion in projected total assets under management,” notes deVere Group.
QQJG allocates over 41% of its weight to tech stocks and over 30% to the healthcare and communication services sectors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.