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The 5 Top Nasdaq ETFs To Buy in Canada for February 2024

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For growth investors, there is no better place to invest than the NASDAQ Index. This index holds the world’s most valuable tech companies like Apple, Microsoft, and Tesla.

Instead of choosing just one stock, investing in NASDAQ ETFs can provide exposure to the entire index.

This article will discuss the 5 best NASDAQ ETFs for Canadian investors in February 2024.

Best Nasdaq ETFs in Canada for 2024

1. iShares NASDAQ 100 Index ETF CAD-Hedged

Here are some key facts about this ETF:

  • Ticker Symbol: XQQ.TO
  • Inception Date: May 3, 2011
  • Assets Under Management: $1.96 billion
  • Number of Holdings: 101
  • MER: 0.39%
  • Distribution Yield: 0.38%
  • 1-Year Performance: 2.20%

XQQ.TO is one of the more popular NASDAQ ETFs in Canada, with nearly $2 billion in net assets. This iShares NASDAQ ETF tracks the 100 largest stocks on the NASDAQ exchange by market capitalization.

Despite being the largest company in the world by market cap, Apple Inc (AAPL) is the second-largest holding in XQQ next to Microsoft (MSFT). These two stocks account for nearly 26% of the allocation in XQQ.

2. BMO NASDAQ 100 Equity Index ETF Hedged to CAD

Here are some key facts about this ETF:

  • Ticker Symbol: ZQQ.TO
  • Inception Date: January 19, 2010
  • Assets Under Management: $1.41 billion
  • Number of Holdings: 102
  • MER: 0.39%
  • Distribution Yield: 0.37%
  • 1-Year Performance: 2.28%

The BMO NASDAQ 100 Equity Index ETF is a nearly identical fund to the previously mentioned XQQ. This BMO NASDAQ ETF was founded in 2010 and has over $1.4 billion in net assets under management.

Its 0.39% MER is exactly the same as XQQ and its 0.37% distribution yield is just slightly lower. Identical performance is to be expected since both of these ETFs track the same stocks.

The information technology sector accounts for 49.36% of ZQQ and its largest holdings are Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN).

3. Horizons NASDAQ 100 Index ETF

Here are some key facts about this ETF:

  • Ticker Symbol: HXQ.TO
  • Inception Date: April 19, 2016
  • Assets Under Management: $496 million
  • Number of Holdings: 100
  • MER: 0.28%
  • Distribution Yield: N/A
  • 1-Year Performance: 9.23%

The Horizons NASDAQ 100 Index ETF is yet another Canadian ETF that tracks the NASDAQ 100. This Horizons NASDAQ ETF is much newer, having been established in 2016.

This fund has a lower MER than both XQQ and ZQQ but is not hedged to the Canadian dollar. Recently, this seems to have benefited shareholders as the ETF has a 1-year return of 9.23 which is higher than both XQQ and ZQQ.

One benefit of HXQ is that its unit price is about half the price of ZQQ and XQQ, making it a more affordable choice for some investors,

4. Invesco NASDAQ 100 Equal Weight Index ETF

Here are some key facts about this ETF:

  • Ticker Symbol: QQEQ.TO
  • Inception Date: May 17, 2021
  • Assets Under Management: $9.2 million
  • Number of Holdings: 101
  • MER: 0.27%
  • Distribution Yield: 0.98%
  • 1-Year Performance: 9.66%

The Invesco NASDAQ 100 Equal Weigh Index ETF is an interesting take on Canadian NASDAQ ETFs. This fund holds all 100 stocks in the NASDAQ 100 at equal weight.

Unlike XQQ, ZQQ, and HXQ, QQEQ has less emphasis on the largest stocks like Apple or Microsoft. This ETF has provided the best 1-year returns out of the NASDAQ ETFs on this list and also has the lowest MER at just 0.27%.

5. Horizons NASDAQ-100 Covered Call ETF

Here are some key facts about this ETF:

  • Ticker Symbol: QQCC.TO
  • Inception Date: September 13, 2011
  • Assets Under Management: $117 million
  • Number of Holdings: 1 ETF with 100 underlying holdings
  • MER: 0.90%
  • Distribution Yield: 12.63%
  • 1-Year Performance: 14.90%

The last ETF on our list is a covered call ETF that provides a high distribution yield on your investment. QQCC pays out a 12.63% annualized yield and pays distributions on a monthly basis.

As with most covered call ETFs, QQCC has a high MER of 0.90%. This is because these funds sell covered call options on the holdings, so they are actively managed.

Nasdaq ETFs

NASDAQ ETFs are index funds that track the stocks from the NASDAQ exchange. Typically, these ETFs track the NASDAQ-100 as a more concentrated holding.

These NASDAQ ETFs in Canada allow Canadians to invest in US tech and growth stocks without paying for them in US dollars.

How To Invest in Nasdaq ETFs in Canada in 2024

Every brokerage in Canada will offer a variety of NASDAQ  ETFs to invest in. The NASDAQ has more volatility than indices like the S&P 500, but overall it sees outsized gains due to its portfolio of high-growth tech stocks.

You can invest in NASDAQ ETFs through any brokerage. If you want to invest regularly in the NASDAQ, consider using a discount brokerage like Wealthsimple or Questrade, where you can get low-cost or even zero-commission trades.

How To Choose Nasdaq ETFs For Your Portfolio

Our list of the five best NASDAQ ETFs in Canada illustrates how much variety there is for assets invested in the same index.

As with most ETFs, it is best to look at factors like the MER, the distribution yield, and recent performance. Even among similar ETFs, all of these things can vary.

A lower MER means you get to keep more of your gains over the long term as you pay less in fees. Also, consider whether you are seeking growth or income, depending on your personal investment strategy.

Downsides of Nasdaq ETFs

While NASDAQ ETFs have provided market-beating growth, they also exhibit a higher amount of volatility. Due to its reliance on growth stocks, the index tends to struggle in high-interest-rate environments.

The NASDAQ index itself also has a high concentration in its largest holdings. These ETFs tend to be heavily weighted by big tech stocks like Apple and Microsoft.

Finally, as you can tell, NASDAQ ETFs are not known for their dividend yields unless you are investing in the covered call ETF QQCC.TO, NASDAQ ETFs tend to have yields below 1.0%.

Methodology

As with any index ETF, most holdings will be the same across all of the NASDAQ ETFs. Therefore, it is important to choose funds with lower fees and strong past performance. A high amount of assets under management also shows that the ETF is trusted by other Canadian investors.

FAQs

What is the best S&P 500 ETF for Canada?

In Canada, there are plenty of ways to invest in the S&P 500 index. The most popular ETF is the BMO S&P 500 Index ETF (ZSP.TO). It has a MER of 0.09% and net assets of $9.3 billion. Second is the Vanguard S&P 500 Index ETF (VFV.TO) with the same MER and $7.3 billion in net assets.

What Canadian ETF tracks Nasdaq 100?

There are several Canadian ETFs that track the NASDAQ-100 index. These include the iShares NASDAQ-100 Index ETF CAD-Hedged (XQQ.TO) and the BMO NASDAQ-100 Equity-Hedged to CAD Index ETF (ZQQ.TO).

What is the Nasdaq equivalent in Canada?

The Canadian market isn’t really known for its tech sector. There isn’t an equivalent to the NASDAQ index in Canada. You can consider the TSX-Venture exchange as a more speculative index of stocks, but it does not come close to the magnitude of the NASDAQ index.

Which is better XQQ or ZQQ?

XQQ and ZQQ are nearly identical in every aspect, including MER, holdings, and performance. As of May 2023, XQQ has more net assets than ZQQ does, with $1.96 billion vs. $1.4 billion for ZQQ.

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Editorial Disclaimer: The investing information provided here is for informational purposes only and is not intended as individual investment advice or recommendation to invest in any specific security or investment product. Investors should always conduct their own independent research before making investment decisions or executing investment strategies. Savvy New Canadians does not offer advisory or brokerage services. Note that past investment performance does not guarantee future returns.

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Author

Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu, personal finance expert, author, and founder of Savvy New Canadians, has written about money matters for over 10 years. Enoch has an MSc (Econ) degree in Finance and Investment Management from the University of Aberdeen Business School and has completed the Canadian Securities Course. His expertise has been highlighted in major publications like Forbes, Globe and Mail, Business Insider, CBC News, Toronto Star, Financial Post, CTV News, TD Direct Investing, Canadian Securities Exchange, and many others. Enoch is passionate about helping others win with their finances and recently created a practical investing course for beginners. You can read his full author bio.

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