Thinking about your next investment? Let’s explore two popular options that could be part of your strategy: ONEQ and QQQ.
With so many investment choices available today, it’s crucial to do your own research. You want to ensure your hard-earned money isn’t stuck in a fund that doesn’t perform well. It’s always best to choose options that help your money grow.
When deciding which funds to trade, what factors should you consider? Investments are a key part of your financial plan, so crafting a solid investment strategy is just as important as the funds you choose.
With so much financial advice out there, let’s dive into a specific type of fund to help make your decision easier.
One advantage of Exchange Traded Funds (ETFs) over mutual funds is their availability. You can buy ETFs from various investment websites and apps, unlike mutual funds which are limited to issuing brokerages.
If you’re considering ETFs, two popular options are ONEQ and QQQ. Both are US stock large growth funds, meaning they invest in similar assets.
With brokers like M1 Finance, you can start investing with as little as $100, with no commissions or broker fees.
ONEQ aims to mirror the performance of the NASDAQ Composite Index. About 80% of ONEQ is invested in common assets from the index. The fund uses statistical sampling to factor in capitalization, industry exposure, P/E ratio, dividend percentage, P/B ratio, and earnings growth, aiming to replicate the NASDAQ’s portfolio.
ONEQ also invests heavily in large-cap stocks, making it riskier as a few large companies dominate the ETF. For example, 11% of the fund is in Apple and almost 10% in Microsoft. Like its market, ONEQ focuses on growth, typically having higher P/E and P/B ratios with lower dividends.
QQQ, also known as Invesco QQQ, aims to match the NASDAQ-100 index, which includes the top 100 non-financial companies on the NASDAQ. QQQ gives you a portfolio of the top 100 NASDAQ stocks, excluding financial companies, and focuses on fast-growing sectors.
Instead of picking individual tech stocks, you can invest in them all at once with QQQ, offering a stake in companies shaping the future economy. QQQ is the 5th most popular ETF, managing over $182 billion in assets. Though not as broad as ETFs like VOO or VTI, it includes some of the most valuable NASDAQ stocks, heavily investing in technology.
Given technology’s strong performance, giants like Microsoft, Apple, and Amazon are key parts of QQQ. This makes the fund a snapshot of the tech sector’s performance. In a bullish market, QQQ offers significant returns and potential for long-term growth with low fees. However, in a bear market, QQQ can decline sharply due to its high-risk sector and lack of small-cap stocks.
A major difference between the two is that ONEQ invests in 1,017 stocks, while QQQ holds 102. About 25% of ONEQ is in small, medium, and micro-cap companies, whereas QQQ is entirely large-cap.
Another key difference is the assets under management, which indicates investor trust. ONEQ manages $4.56 billion, making it a medium-sized fund, while QQQ manages $194.56 billion, making it a large fund.
QQQ mainly consists of technology and communication stocks, which make up over two-thirds of the index. This concentration poses a risk; if tech stocks correct, QQQ will suffer more than the S&P 500 tech stocks.
The 5-year return of QQQ has been better than ONEQ (26.83% vs. 24.24%). In the second quarter of 2021, QQQ rose by 44% over the past 12 months and has been growing at an annual rate of 28% over the last five years.
When it comes to fees, both funds are minimal. ONEQ has an expense ratio of 0.21%, while QQQ’s is 0.20%, making QQQ slightly cheaper.
Both funds are US stock large growth funds, so it’s best to invest in one, not both. Your choice depends on your investment goals. For high-growth potential, QQQ is a good option due to its focus on the tech sector. Based on recent performance, QQQ has outperformed, suggesting that large-cap investments might be more beneficial.
If you prefer to include mid and micro-cap companies in your portfolio, consider ONEQ. Both ETFs have performed well over the last decade, so either choice could be a good one.
In summary, the Fidelity equivalent of QQQ is ONEQ, followed by FUSEX, which tracks 80% of the S&P 500. VOO is similar to QQQ, with both managing over $100 billion in assets and having low expense ratios.
Ultimately, your decision should align with your financial situation, goals, and risk tolerance. Building your investment portfolio now will benefit you in the long run. Start planting your financial seeds today to enjoy the fruits of your investment in the future.