Best ETFs for 2018: The PowerShares QQQ Trust Stumbles, But Is Still Strong

QQQ ETF - Best ETFs for 2018: The PowerShares QQQ Trust Stumbles, But Is Still Strong

This article is a part of InvestorPlace’s Best ETFs for 2018 contest. The readers’ choice for the contest is the PowerShares QQQ Trust ETF (NASDAQ:QQQ).

Tech stocks had a good year in 2017, and they are helping the PowerShares QQQ Trust ETF (NASDAQ:QQQ) by mostly continuing that strength into the first quarter of 2018.

It was looking really good for a while. Up until the markets got into March, most of the major constituents of the QQQ, including Apple Inc.(NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT), had actually scored decent runs. With MSFT and AAPL making up over 20% of the fund’s holdings according to Morningstar, their success went a long way toward pushing the QQQ ETF higher and higher.

Unfortunately, the trend didn’t carry all the way through the quarter, and much of March has been spent in a slide as political worries made their way to the forefront. This has hit stocks pretty much across the board, as investors try to brace for the impact of interest rates and the looming specter of trade wars.

There were also individual headlines that tied an anchor to the fund recently. If you want an example, look no further than Facebook, Inc. (NASDAQ:FB). It lost nearly 10% in just a couple days on news that it had not been careful with its data — or rather, its users’ data. At around 5% of the QQQ ETF’s portfolio, it can do some serious damage all by itself. It remains to be seen where the bottom will be.

Still, the news is not all bad. These are strong tech stocks, a majority of which are still absolutely worth owning one way or the other. Even Facebook, battered as it has been of late, still has plenty to offer investors. Analysts are calling for FB earnings to be up 32% this quarter and revenue to rise by 42%. Even if those numbers take a hit, that’s still a lot of growth. Once the headlines fade or get priced in and the markets find themselves generally at a better valuation, there are plenty of growth drivers at some of the biggest names in this fund.

And don’t forget that the QQQ ETF has an expense ratio of just 0.2%, or $20 annually per $10,000 invested. Buying into the QQQ gives an investor access to a lot of quality at a reasonable price.

All this means that the current dip could actually be a buying opportunity if you also believe the QQQ will turn out to be among the best ETFs this year.

Jessica Loder is an assistant editor at As of this writing, she did not hold a position in any of the aforementioned securities.

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