ETF ( or Index Fund ) That Mimics NASDAQ?

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hotajax
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ETF ( or Index Fund ) That Mimics NASDAQ?

Post by hotajax »

Is there such a thing? Thanks in advance.
StrangePenguin
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by StrangePenguin »

hotajax wrote: Sat May 27, 2023 7:25 pm Is there such a thing? Thanks in advance.
I doubt you'll get a lot of enthusiasm for investing in it on this board, but that's pretty much the definition of QQQ https://www.invesco.com/qqq-etf/en/home.html.
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by nisiprius »

QQQ is a famous index ETF which tracks the NASDAQ-100, the hundred biggest stocks traded on the Nasdaq. People have been dazzled by recent outperformance and may not fully understand that the performance is associated with risk. The history since inception looks like this:

Source

Image

The thing to be clear on is that if two investors had made equal $10,000 investments in QQQ and Vanguard Total Stock--both on the day QQQ was launched--the QQQ would have seen it go up like a skyrocket and then crash, losing -80% of its value peak to trough. At that point, the QQQ investor would have been so far behind Total Stock that they would not have caught up for sixteen years.

And of course, if the QQQ investor had not invested until everybody was talking about it, and invested near the peak, they would still be behind today.

Fidelity has a mutual fund, FNCMX, and ETF, ONEQ, which track the Nasdaq Composite Index. That is the one quoted in the news, and it covers the entire Nasdaq. I don't know why you don't hear much about ONEQ. Investors have put $186 billion into QQQ, and only $4.4 billion into ONEQ.

To John C. Bogle, "index fund" didn't mean just that a product followed some index, any index. The confusion didn't really creep in until providers began creating many ETFs focussed on narrow indexes, and people tried to capitalize on the popularity of "index funds" by calling them that. But Bogle wrote:
The original idea of the index fund—own the entire U.S. stock market, own it at low cost, hang on to it forever—has been, to put it bluntly, bastardized.

In addition to 109 index funds now linked to a relative handful of broad market indexes (S&P 500, Wilshire Total Market, Russell 3000), there are 224 index funds linked to narrow market indexes— small cap-growth stocks, technology stocks, even South Korean stocks—funds that seem to be bought to be sold.
Anyway the answer to your question is that QQQ is the big famous NASDAQ-100 ETF with $186 billion invested in it, and there is also a much smaller, obscure ETF, ONEQ, that tracks the whole Nasdaq Composite.

And I personally don't think either of them makes any logical sense at all as an investment.
Last edited by nisiprius on Sat May 27, 2023 9:00 pm, edited 1 time in total.
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Dave55
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by Dave55 »

nisiprius wrote: Sat May 27, 2023 7:58 pm QQQ is a famous index ETF which tracks the NASDAQ-100, the hundred biggest stocks traded on the Nasdaq. People have been dazzled by recent outperformance and may not fully understand that the performance is associated with risk. The history since inception looks like this:

Source

Image

The thing to be clear on is that if two investors had made equal $10,000 investments in QQQ and Vanguard Total Stock--both on the day QQQ was launched--the QQQ would have seen it go up like a skyrocket and then crash, losing -80% of its value peak to trough. At that point, the QQQ investor would have been so far behind Total Stock that they would not have caught up for sixteen years.

And of course, if the QQQ investor had not invested until everybody was talking about it, and invested near the peak, they would still be behind today.

Fidelity has a mutual fund, FNCMX, and ETF, ONEQ, which track the Nasdaq Composite Index. That is the one quoted in the news, and it covers the entire Nasdaq. I don't know why you don't hear much about ONEQ. Investors have put $186 billion into QQQ, and only $4.4 million into ONEQ.

To John C. Bogle, "index fund" didn't mean just that a product followed some index, any index. The confusion didn't really creep in until providers began creating many ETFs focussed on narrow indexes, and people tried to capitalize on the popularity of "index funds" by calling them that. But Bogle wrote:
The original idea of the index fund—own the entire U.S. stock market, own it at low cost, hang on to it forever—has been, to put it bluntly, bastardized.

In addition to 109 index funds now linked to a relative handful of broad market indexes (S&P 500, Wilshire Total Market, Russell 3000), there are 224 index funds linked to narrow market indexes— small cap-growth stocks, technology stocks, even South Korean stocks—funds that seem to be bought to be sold.
Anyway the answer to your question is that QQQ is the big famous NASDAQ-100 ETF with $186 billion invested in it, and there is also a much smaller, obscure ETF, ONEQ, that tracks the whole Nasdaq Composite.

And I personally don't think either of them makes any logical sense at all as an investment.
ONEQ has $4.38 Billion not $4.4 million AUM. (Source Fidelity and Morningstar).

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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by nisiprius »

Dave55 wrote: Sat May 27, 2023 8:26 pm ...ONEQ has $4.38 Billion not $4.4 million AUM. (Source Fidelity and Morningstar).
:oops: Yes, bad mistake on my part, fixed now.
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by fatgeorge »

nisiprius wrote: Sat May 27, 2023 7:58 pm The thing to be clear on is that if two investors had made equal $10,000 investments in QQQ and Vanguard Total Stock--both on the day QQQ was launched--the QQQ would have seen it go up like a skyrocket and then crash, losing -80% of its value peak to trough. At that point, the QQQ investor would have been so far behind Total Stock that they would not have caught up for sixteen years.
Does this chart take into account the difference in expenses rate? Seem to be 0.20 for QQQ versus 0.03 for VTI.
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by asset_chaos »

Google is your friend for such questions. When I google the thread subject line, the first item is a blurb about the Invesco QQQ Trust with a link to an article at the Motley Fool entitled "Best Nasdaq ETFs in 2023". Yes, ETFs, plural. I didn't read up on Nasdaq ETFs because I don't think it's a reasonable investment, but google immediately reveals where to look to answer the question.
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by HanSolo »

hotajax wrote: Sat May 27, 2023 7:25 pm Is there such a thing? Thanks in advance.
More info in another recent thread: Why not Nasdaq and Dow?
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by nisiprius »

fatgeorge wrote: Sat May 27, 2023 9:48 pm
nisiprius wrote: Sat May 27, 2023 7:58 pm The thing to be clear on is that if two investors had made equal $10,000 investments in QQQ and Vanguard Total Stock--both on the day QQQ was launched--the QQQ would have seen it go up like a skyrocket and then crash, losing -80% of its value peak to trough. At that point, the QQQ investor would have been so far behind Total Stock that they would not have caught up for sixteen years.
Does this chart take into account the difference in expenses rate? Seem to be 0.20 for QQQ versus 0.03 for VTI.
Yes, all of the information the "return" of mutual funds and ETFs is net of expenses. The "official" data published by fund companies on "average" returns (CAGR) is net of expenses, and it is easy to cross-check PortfolioVisualizer against those numbers and they're the same.

You can also verify that PortfolioVisualizer (and others') data includes expenses by comparing the numbers for different share classes of the same fund, where they only difference is expenses.
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by maxim81 »

hotajax wrote: Sat May 27, 2023 7:25 pm Is there such a thing? Thanks in advance.
QQQ. Ride the tech wave. I read somewhere that the top 5? companies of sp500 (MS, Apple, Nvidia) had like a 40%+ return while rest of sp500 was ~<10% or so. I'll try to find the source.

Good article: https://www.nytimes.com/2023/03/31/busi ... p-500.html
The fate of the S&P 500 index — used by investors as a barometer for the health of corporate America, and cited by presidents as a measure of their handling of the economy — often comes down to just two companies: Apple and Microsoft.
and yes, this is anti everything BH stands for.

Tech has clearly outgunned rest of the market: https://www.portfoliovisualizer.com/fun ... chmark=SPY
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Re: ETF ( or Index Fund ) That Mimics NASDAQ?

Post by nisiprius »

maxim81 wrote: Mon May 29, 2023 11:13 am...Tech has clearly outgunned rest of the market: https://www.portfoliovisualizer.com/fun ... chmark=SPY ...
1) Not if you take any account of risk in any reasonable way.

2) QQQ is not "tech." If you believe tech stocks are Just Plain Better than the rest of the market, why invest in an ETF that is only half tech?

Pepsi, Costco, Starbucks, MercadoLibre, Marriott, American Electric Power, Lululemon, Old Dominion Freight Line, Dollar Tree... these are not "tech" by any stretch of the imagination.

And QQQ is not a curated collection of stocks following any consistent theme. QQQ is tech-heavy through a happy accident of history: in the 1990s tech startups wanted to go public, and wanted a less reputable exchange that had looser listing requirements then the NYSE and (then) AMEX, and cost less.
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