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The 5 Best Index Funds to Buy

The best ETFs are often pegged to big-name indices

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Best Index Fund #2: PowerShares QQQ Trust (QQQ)

best index funds qqq etfAnother one of the best index funds is the PowerShares QQQ Trust (QQQ), which also follows one of America’s most ubiquitous stock indices … sort of. The QQQ ETF actually tracks the Nasdaq-100, which represents the Nasdaq’s 100 largest non-financial stocks by market cap. They still represent a large percentage of the Nasdaq’s overall weighting, but not so much that one perfectly follows the other. Also, while the Nasdaq is known primarily for its technology holdings, both it and the Nadsaq-100 are far from completely tech-centric. For instance, Starbucks (SBUX), content and cable provider Comcast (CMCSA) and biotech firm Gilead Sciences (GILD) are all held in the QQQ ETF. The PowerShares QQQ Trust — also called “The Q’s” or “The Cubes” — still provides a healthy heaping of tech, of course. Technology stocks make up about 57% of the holdings for the QQQ ETF, while consumer discretionary is the next largest at 14%, and healthcare third at 13%. Most of the top holdings are tech, too, including the top three: Apple, Microsoft (MSFT) and Google. Admittedly, the QQQ ETF is something of a misfit given that it doesn’t really play to any one particular theme. But it’s one of the best index funds, as it gives investors a good diversified large-cap holding if you’re very bullish on tech stocks. QQQ charges 0.2% in expenses.

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