This article is a part of InvestorPlace.com’s Best ETFs for 2020 contest. The reader’s choice for the contest is the PowerShares QQQ Trust (NASDAQ:).
Last year, InvestorPlace.com readers believed the iShares MSCI Emerging Markets ETF (NYSEARCA:) would win the Best ETFs contest for 2019. Although the probable reason for why our readers chose this exchange-traded fund to win the contest — hope that stocks in emerging markets like China would make a comeback — was sound, the trade war between the U.S. and China made it a lackluster performer throughout the year.
Now, instead of taking a bet on outside markets, our readers have returned to their pick (and overall winner) for 2018’s ETF contest: the PowerShares QQQ Trust (NASDAQ:).
The QQQ ETF is still inherently affected by the trade war to some extent — it tracks the Nasdaq 100, which includes many big-name tech stocks like Apple (NASDAQ:). However, its overall allocation of holdings is diverse enough that it isn’t as risky as an ETF like EEM.
In fact, while EEM has only managed to gain 12% so far this year, QQQ has gained 33% year to date. Consider that the YTD gains for the S&P 500 are just 27%.
Heavy Emphasis on Tech With QQQ ETF
The mindset of our readers is made clearer when you consider their No. 2 and 3 picks for the 2020 contest. Specifically, our readers were also considering the Technology Select Sector SPDR Fund (NYSEARCA:) and iShares S&P Semiconductor Fund (NASDAQ:) as top contenders.
Clearly, InvestorPlace.com readers have a high degree of faith in the outlook of tech stocks. The optimism is well-justified given that these companies are packed full of potential catalysts. Their innovations — both current and future — will help shape our world in the years ahead. Many of its holdings are a part of the movement toward the “Internet of Things,” autonomous vehicles, 5G, artificial intelligence and high-tech innovations in healthcare.
According to the , it’s the “2nd most traded ETF in the US based on average daily volume traded.” And there’s a good reason why it’s considered one the best ETFs.
Although are in the information technology sector (think Microsoft (NASDAQ:), PayPal (NASDAQ:) and Adobe (NASDAQ:)), it also has a significant emphasis in the communications (21.4%), consumer discretionary (15.9%) and healthcare (7.4%) sectors. This makes it much “[m]ore than just a tech fund.”
Its diversity means that it holds other top-tier companies like Facebook (NASDAQ:), Activision Blizzard (NASDAQ:), Amazon (NASDAQ:) and Amgen (NASDAQ:).
But even so, there are several risks to consider before betting the house on QQQ.
Some of these risks include (but are not limited to) the following:
- The U.S. 2020 Presidential election may influence investors’ outlook on some QQQ holdings depending on which candidates endure.
Bottom Line on the QQQ
Ultimately, our reader’s choice of the QQQ ETF is a reflection of the broader market’s continued enthusiasm as we head into the New Year.
Although we started 2019 in the trenches after a massive selloff in December 2018, the market has since recovered and concerns of a … for now. Consider that concerns surrounding the trade war are also diminishing with an anticipated “global economic recovery … into 2020.”
With all of that, many experts expect 2020 to be another strong year for stocks. If that ends up being true, then QQQ will undoubtedly be a top performer for the year and perhaps the best ETF in the 2020 contest like it was in 2018.
Robert Waldo is a web editor for InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
