Trading The Nasdaq 100 To Capitalize On The Tech Rally This Year? You May Want To Check Out This ETF Instead

For many investors, the Nasdaq-100® is synonymous with tech. But that may not be exactly the case. While the index is perceived as typically tech-heavy, surprisingly only 37 companies within the index are classified as ‘technology’. For investors who are trading Nasdaq-100® ETFs primarily as a way to trade their assumptions about tech, those non-tech companies can end up muddying the results of their trading strategy.

That’s why Toronto-based Evolve ETFs made the Evolve NASDAQ Technology Index ETF (QQQT). QQQT trades on the Toronto Stock Exchange (TSX) and tracks the Nasdaq-100 Technology Sector Adjusted Market-Cap Weighted™ Index, which was specifically crafted to include only those 37 companies in the Nasdaq-100® that are considered pure tech. 

The Tech Sector Has Carried The Market In An Otherwise Tough Year

Despite the August cool-down driven by worries about interest rates remaining higher for longer, it has been a phenomenal year for tech stocks. The AI buzz has sent stocks like Nvidia NVDA soaring more than 200% while Meta META and Tesla TSLA also pulled off triple-digit gains in the first half of the year. Meanwhile, the rest of the “magnificent seven” — Alphabet GOOG, Amazon AMZN, Apple AAPL and Microsoft MSFT — have all risen more than 35% since the start of the year. 

In fact, it’s that bullish tech growth that has buoyed many of the broader indexes that they’re included in. For example, without those seven stocks, the S&P 500® would actually have trended down for most of the first half of 2023 rather than gaining more than 17% year-to-date as of this writing. Likewise, about 80% of the growth in the Nasdaq-100® has come from the same magnificent seven. 

While that’s been a boon to those indexes, it also means a lost opportunity for investors holding those indexes as they actually captured just a fraction of the total gains they could have gotten with pure exposure to tech stocks.

QQQT Gives Investors Pure Tech Exposure

In the first half of the year, the Nasdaq-100 Technology Sector Adjusted Market-Cap Weighted™ Index (NDXT10 Index) – which is the tech-adjusted index tracked by Evolve’s QQQT – rose over 57% compared to just under 39% for the Nasdaq-100®. The current top 10 holdings (as of August 31, 2023) of QQQT include:

For investors who have been turning to the Nasdaq-100® as their key tool for trading the soaring tech sector, QQQT is designed to give you the pure tech exposure you’re looking for without being watered down by the non-tech stocks that are also lumped into the Nasdaq-100®. 

Featured photo by Yiorgos Ntrahas on Unsplash.

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