5 Best NASDAQ ETFs to Buy for Q1 2025

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Exchange-traded funds (ETFs) are a popular way to invest in the Nasdaq Composite because they’re easy, inexpensive to trade, and give you access to diversified investment opportunities.

ETFs of this type are structured to track the 3,300 stocks that make up the technology-focused Nasdaq index. This page helps you learn the best strategies for investing in one of these ETFs and takes you through everything you need to know.

Best Nasdaq Composite ETFs

Lots of ETFs track the performance of this index, so you have plenty of options when choosing one. A quick run-down of the best ones can be found in the table below:

1. Invesco NASDAQ 100 ETF (NASDAQ: QQQM)

• Current price: $197.27
• AUM: $28.54 billion
• Annual expense ratio: 0.15%
• YTD performance: 17.05%
• Annual dividend yield: 0.66%

Launched in October 2020, the Invesco NASDAQ 100 ETF is a cost-effective alternative to the popular Invesco QQQ Trust Series 1 (NASDAQ: QQQ). Both funds track the Nasdaq-100 Index, but QQQM stands out with its lower expense ratio of 0.15%, making it an attractive option for long-term investors.

QQQM’s strategic appeal lies in its fee efficiency, offering a reduced expense ratio compared to QQQ. This cost advantage can compound over time, providing better long-term returns.

While QQQ boasts higher liquidity and a narrower bid/ask spread, QQQM’s cost structure makes it the superior choice for investors focused on minimizing fees over an extended investment horizon.

2. Invesco QQQ Trust Series 1 (NASDAQ: QQQ)

• Current price: $479.38
• AUM: $284.39 billion
• Annual expense ratio: 0.20%
• YTD performance: 17.06%
• Annual dividend yield: 0.57%

The Invesco QQQ Trust Series 1 offers investors exposure to the 100 largest non-financial companies on the Nasdaq. Known for its high liquidity and trading volume, QQQ is a preferred choice for short-term traders due to its tight bid/ask spreads and ease of trading.

Since its inception in 1999, QQQ has consistently outperformed the S&P 500, showcasing its robust growth potential. QQQ’s sector allocation heavily favors information technology, which constitutes over half of its holdings.

This focus has contributed to its strong performance, particularly with top holdings like Apple, Microsoft, and NVIDIA. Despite its higher expense ratio compared to its sibling QQQM, QQQ’s extensive trading volume and established presence make it a staple for those looking to capitalize on tech sector momentum.

3. ProShares Ultra QQQ (NYSEARCA: QLD)

• Current price: $100.18
• AUM: $7.01 billion
• Annual expense ratio: 0.95%
• YTD performance: 31.82%
• Annual dividend yield: 0.14%

ProShares Ultra QQQ aims for twice the daily performance of the Nasdaq-100 Index, making it a dynamic choice for short-term traders. This leveraged approach allows for significant gains in bullish markets, but it also increases the risk of substantial losses during market downturns.

With a strong YTD performance of 31.82%, QLD has proven its ability to amplify returns effectively. However, the ETF’s high expense ratio of 0.95% reflects the costs associated with its leveraged strategy.

QLD is best suited for those with a high-risk tolerance and a strong understanding of market trends. While it can deliver substantial short-term gains, its inherent volatility and risk factors make it less ideal for long-term holding.

4. Direxion NASDAQ-100 Equal Weighted Index Shares ETF (NASDAQ: QQQE)

• Current price: $89.15
• AUM: $1.25 billion
• Annual expense ratio: 0.35%
• YTD performance: 5.33%
• Annual dividend yield: 0.85%

The Direxion NASDAQ-100 Equal Weighted Index Shares ETF provides a unique approach by equally weighting each constituent of the Nasdaq-100 Index. This methodology contrasts with traditional market cap-weighted ETFs, offering a balanced exposure to both large and smaller companies within the index.

As a result, smaller companies have a greater impact on performance, which can enhance diversification and reduce concentration risk. QQQE’s sector allocation is notably different from its market-cap weighted counterparts, with a reduced emphasis on information technology and increased exposure to sectors like healthcare and consumer staples.

This broader diversification can be advantageous during periods of sector rotation or market volatility, providing a more evenly distributed risk profile. Quarterly rebalancing ensures the ETF maintains its equal-weight strategy, adjusting for market fluctuations.

While QQQE has underperformed traditional Nasdaq-100 ETFs like QQQ in the long run, it has periods of relative outperformance, particularly during broad market selloffs or when smaller companies gain momentum.

5. ProShares Short QQQ (NYSEARCA: PSQ)

• Current price: $41.17
• AUM: $519.81 million
• Annual expense ratio: 0.95%
• YTD performance: -13.14%
• Annual dividend yield: 7.04%

ProShares Short QQQ offers a unique strategy for investors seeking to profit from potential downturns in the tech-heavy Nasdaq 100. As an inverse ETF, PSQ aims to deliver daily returns that correspond to -1x the daily performance of the Nasdaq-100 Index.

This tactical tool is designed for short-term hedging or speculative trading, not long-term investment, due to its daily rebalancing and compounding effects. With a current dividend yield of 7.04%, PSQ also appeals to income-focused investors looking to capitalize on its dividend distribution strategy.

PSQ employs derivatives like swaps to achieve its inverse exposure, mitigating the need for direct short selling. This approach reduces the fund’s risk profile compared to outright short positions, although investors should remain cautious due to potential tracking errors and counterparty risks associated with derivative instruments.

Despite its tactical advantages in volatile markets, PSQ requires careful timing and monitoring, making it more suitable for experienced traders seeking to capitalize on short-term market movements.

Best place to buy Nasdaq Composite ETFs

Many different online brokers give you the ability to trade ETFs, so you have plenty of choices when it comes to picking the right platform for you. To get started right away, select one from the table below which features some of the best brokers around.

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Min. Deposit $100

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No. assets 50+

Demo account Yes

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Min. Deposit $100

Fees From 2%

No. assets 2800+

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CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.

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Public

Min. Deposit $20

Fees 1-2%

No. assets 9000+

Demo account No

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What is a Nasdaq Composite ETF?

It is an exchange-traded fund (ETF) that tracks the performance of the Nasdaq Composite index: a US-based index that contains 3,300 different stocks. With an ETF of this type, you can be invested in the performance of the whole index, but also keep the freedom of being able to trade your investment on an exchange. Unlike other more balanced stock indices, the Nasdaq is heavily focused on the technology sector.

The best-known option is the Invesco QQQ, but as the index in question is so widely used, there are a variety of different ETFs for you to choose from.

Is it a good investment?

They can be a good investment, but whether this is the case for you will depend on your investing goals. First and foremost, the main reason to buy one is in order to invest in the technology sector.

They offer a good amount of diversification in terms of investing in technology-focused companies. The index’s 3,300 listings are predominantly made up of tech stocks, so you won’t have to be worried about being overly exposed to one small part of the sector. 

One thing in favour of using ETFs is that they are cheaper to trade than a mutual fund performing the same function. This is because mutual funds require investors to pay management fees to fund managers. An ETF can also be traded on an exchange at any time during market hours, whereas a mutual fund can only be bought and sold at the end of the day.

That’s not to say that there’s no risk involved. The volatile first half of 2020 has caused a roller coaster ride for investments of all types, and ETFs are no exception. Seeing volatility like this is a solid reminder to verify the condition of the broad stock market before trading any investment asset, ETFs included.

1. How to choose an ETF

There’s a bunch of different ETFs you can buy that are pegged to the Nasdaq. Here’s a look at some key factors to consider:

• Total value of assets. An ETF should have a minimum level of assets, with $10 million as a good starting point for investors. A lower number in terms of assets means that the ETF will have limited liquidity, as well as wide price spreads. For ETF investors, those are both conditions to avoid. There’s nothing to worry about on this front.
• Charges and fees. ETFs generally charge low fees, with the average expense ratio just over half the size of the average charged by index funds. ETFs are also easier to trade than index funds, since you can trade them within seconds like you would a stock. The exact fees charged, however, will vary from ETF to ETF, so make sure to do your research.
• Daily trading volume. There’s no set rule for an ideal average daily volume for an ETF, but generally, the rule is: the higher the trading volume, the better. Higher volume levels tend to make ETFs more stable and less prone to wild price swings. 
• Performance over time. Look for an ETF with a strong track record, as that’s a good indicator of how well it will likely perform in the future.
• Liquidity. ETF liquidity includes both the volume of units traded on an exchange and the liquidity of individual securities within an ETF’s portfolio. The more liquidity an ETF has, the more interest it attracts, and the more stable its price action tends to be.
• Whether it pays dividends. Some ETFs pay dividends, offering an added bonus in addition to the price gains investors hope to see. Dividend-issuing ETFs collect the dividends offered by companies tracked on the index and then distribute these to ETF investors. 
• Location and tax status. An ETF can be subject to the laws of whatever country in which it’s based. If you’re deciding between two different ETFs with similar track records and one of them is based in a lower-tax country, you might want to consider the latter option.
• Leverage. Trading with leverage involves venturing just a small percentage of the total trade, with your broker covering the rest. Many stockbrokers will enable you to trade certain ETFs with leverage. That doesn’t mean you should automatically use this practice, though, as trading with leverage means bigger gains than non-leveraged trades when you guess right but also bigger losses than non-leveraged trades when you’re wrong. It’s a strategy that’s generally best left for more experienced investors. Check out our stock trading courses if you want to learn more.

2. How to choose a broker

If you want to trade ETFs, then you’ll need to find a broker that can facilitate these trades. There are a wide variety of different online trading platforms from which you can choose, so we’ve compiled this list of what you want to look out for when selecting the right broker for you. 

• What services they offer. The first step you need to check is that the broker you have selected offers ETF trading, and whether – if so – you’ll be able to use the platform to buy and trade Nasdaq ETFs. Beyond this you might want to check other trading options the broker offers, such as how much leverage you can trade with.
• Whether the platform offers a demo account. If you’re new to ETF trading, then it’s wise to start off with a demo account. These are offered by many brokers and allow you to place trades without risking any of your capital. You won’t make any money with a demo account, but using one to learn the ropes can prevent losses later on.
• The fees charged. Trading ETFs often incurs fees, and these will vary from broker to broker. Sometimes there’ll be a flat rate for making trades, and sometimes brokers will charge commission. Check out the fees charged by a broker before signing up to their service.
• Financial limits. Brokers will often apply a variety of limits to users’ trading activities. This can include deposit/withdrawal minimums and maximums or daily ETF trading limits. Make sure you pick a provider that can cater to the level of trading you’re looking to be doing.
• Security features and regulation. When investing your money with a platform, you want to ensure that it is reputable, complies with relevant legislation, and has good online security features. You can find reliable brokers by looking through our reviews, or simply follow the links to brokers that are listed on this page.

3. Use our top tips before investing

Before investing, it’s a good idea to have a plan. This helps you keep a level head and make better decisions in the future. Follow these steps to build an intelligent investing plan:

• Do your research. Study the top ones that we listed earlier. Compare each one to your own specific investing goals before deciding which ETF to choose. 
• Set a budget. Setting a budget helps you strip emotions such as fear and greed out of your decision-making process. It also ensures that you have plenty of money left over for future trades, even if a few trades don’t go your way (as is always likely to happen from time to time). Never invest more than you can afford to lose.
• Select the right platform. We’ve reviewed all the best platforms that offer ETF trading to help you make the right choice. Choose the broker you want based on the criteria that are most important to you, whether it’s low transaction fees, ease of use, strength of reputation, or anything else.
• Grow your investments over time. As a beginner investor, consider starting small. You can always raise the size of your investments as you get better with time.
• Think long-term. ETFs can be used for shorter-term trading, especially if you’re a seasoned investor who can successfully use leverage to boost your gains. Still, patience can be rewarded, if you’ve got the nerves to hold on for bigger long-term gains by holding your ETF throughout a period that sees the index rise steadily.

How do I trade Nasdaq Composite ETFs?

Here are three important review topics to explore before buying into one:

1. How to choose an ETF
2. How to choose a broker 
3. Use our top tips to succeed

Methodology: How we choose the best NASDAQ ETFs

At Invezz, we are dedicated to helping investors make informed decisions by providing authoritative, accessible, and engaging advice and recommendations. Our curated section of the best Exchange-Traded Funds (ETFs) is carefully selected by our team of experienced market analysts and reviewed by a sub-editor. This methodology outlines the rigorous process we follow to ensure our ETF recommendations are up-to-date, reliable, and insightful.

• Analyst research & recommendations: Our seasoned market analysts use their in-depth sector knowledge to identify ETFs with strong potential, ensuring they meet high standards of performance, liquidity, and market potential.
• ETF evaluation: We evaluate ETFs based on their underlying assets, historical performance, expense ratios, and tracking accuracy, alongside macroeconomic factors and sector trends.
• Fund performance reports: We assess ETFs through the latest performance reports, analyzing key metrics like returns, volatility, expense ratios, and assets under management (AUM).
• Sector analysis and external recommendations: Our detailed sector analysis, combined with recommendations from reputable sources like Barron’s and Zacks, provides an additional layer of validation for our selections.
• Quarterly review & refresh: We update our curated ETF list quarterly, re-evaluating each ETF based on the latest reports, industry developments, and market conditions to ensure our recommendations reflect the most current information available.