ETFs (exchange-traded funds) that track Nasdaq indices, such as the Invesco QQQ Trust (QQQ) or the Invesco NASDAQ 100 ETF (QQQM), have proven to be an attractive option for investors seeking exposure to the technology sector and high-growth innovative companies. In 2025, the Nasdaq has shown a notable recovery after a period of volatility, primarily driven by optimism surrounding artificial intelligence (AI), the strength of the semiconductor sector, and reduced concerns about trade policies that could have affected the global economy.
In my opinion, Nasdaq ETFs are a powerful tool for diversifying portfolios, as they provide access to tech giants like Apple, Microsoft, Amazon, and NVIDIA, which have been key market drivers. For example, NVIDIA's surge, with an increase of almost 50% since April 2025, reflects growing confidence in AI-focused companies. However, the high concentration in technology (around 50% of holdings in some ETFs like QQQ) implies significant risk, especially in an environment where valuations of these companies are at elevated levels. This can lead to volatility if the market experiences corrections or if expectations regarding AI are not met in the short term.
On the other hand, options like the Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE) or the Fidelity Nasdaq Composite Index ETF (ONEQ) offer interesting alternatives to mitigate concentration risk. The QQQE, by distributing weight equally among the 100 companies in the Nasdaq-100, reduces dependence on tech giants, while the ONEQ provides broader exposure by including more than 3,500 companies from the Nasdaq Composite. These options may be ideal for investors seeking a balance between growth and diversification.
In terms of costs, Nasdaq ETFs typically have low expense ratios (for example, 0.15% for QQQM and 0.20% for QQQ), making them attractive compared to traditional mutual funds. However, investors should be prepared for the inherent volatility of the Nasdaq, as seen in 2022 when the index fell by 33%. Despite this, its long-term performance, with a total return of 398% over the last decade for the Nasdaq-100, outperforms the S&P 500 and Dow Jones, suggesting that risk tolerance may be rewarded.
In conclusion, Nasdaq ETFs are an excellent option for those seeking long-term growth, especially in a context where technology and AI continue to lead innovation. However, it is crucial for investors to assess their risk tolerance and consider diversifying with equal-weighted or broader ETFs to mitigate potential declines. As always, before investing, it is essential to conduct thorough research and align decisions with personal financial goals.