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The Invesco Nasdaq 100 ETF (QQQM) tracks the performance of the Nasdaq 100 Index.
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QQQM is quite similar to the Invesco QQQ Trust ETF, but it comes with a lower expense ratio.
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The Vanguard Information Technology ETF has significant holdings in Nvidia, Microsoft, and Apple, thereby increasing its risk profile.
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Many investors are drawn to tech stocks, largely due to their stellar performance over the last decade, outpacing other sectors in the U.S. economy.
Investing in individual tech stocks can certainly lead to substantial returns, but it’s not the only way to profit from the tech sector. Numerous tech-focused ETFs can provide a safer alternative with lower risk.
Heading into 2026, one ETF appears promising, while there’s another that I prefer to steer clear of at this time.
The Invesco NASDAQ 100 ETF (NASDAQ:QQQM) launched in 2020 and includes the 100 largest non-financial companies on the Nasdaq Stock Exchange, which are part of a larger grouping of non-financial stocks known as the Nasdaq Composite.
QQQM is quite similar to the Invesco QQQ Trust ETF (NASDAQ:QQQ), but with an expense ratio of 0.15% compared to QQQ’s 0.20%. While this difference may seem minor, it can make a significant impact over time, especially for long-term investors.
Though QQQM isn’t exclusively a tech ETF, the technology sector dominates, accounting for 65% of its portfolio. The next largest sectors include consumer discretionary at 17.6%, healthcare at 4.9%, and telecommunications at 3.5%.
Investors in QQQM are exposed to some key players in the tech industry, such as Nvidia, Amazon, Apple, and Microsoft, among others. These companies often expand their focus to various technology fields, providing broad coverage with a single investment.
On the flip side, the Vanguard Information Technology ETF (NYSEMKT:VGT) has delivered impressive returns over the past decade, even surpassing the Nasdaq 100 during that time. It’s undeniably a strong ETF with solid holdings.
However, VGT is heavily concentrated in just three stocks: Nvidia, Apple, and Microsoft, which make up over 45% of the ETF. While that concentration has been beneficial in recent years, it doesn’t ensure continued success.
Additionally, VGT only invests in the technology sector, excluding major companies in other categories that are fundamentally tech-oriented, like Amazon and Alphabet. It’s important to include such firms for a comprehensive tech investment, and their exclusion could be problematic as we move into 2026.
Before you make an investment in the Invesco Nasdaq 100 ETF, you might want to consider a portfolio that includes a diverse range of high-potential stocks. Several analysts have identified the top stocks to watch right now, and the Invesco Nasdaq 100 ETF isn’t highlighted among them.
So, in conclusion, really think about what exposure you want as you enter the new year. It may include more than just the traditional definitions of tech companies.
