Are you a Canadian investor looking to invest in the US stock market?
The NASDAQ-100 Index is one of the more popular indices that track the top equity securities in the US.
My guide to the best Nasdaq ETFs in Canada will show you if it’s a good fit for your investment portfolio.
What Are Nasdaq ETFs?
A Nasdaq ETF is a low-cost approach for you to gain diversified exposure to the top 100 non-financial stocks trading in the US stock market.
These funds track the performance of companies as they are held in the NASDAQ-100 Index.
Canadian investors do not have many options to explore among Canada-listed Nasdaq 100 ETFs.
Financial sector companies make up a significant portion of the top US-listed equity securities. Since the NASDAQ-100 excludes financial firms, the index tends to have a heavier focus on companies in the tech sector, among others.
Some of the mainstay names in the benchmark index include tech giants like Apple, Amazon, and Google.
- Horizons NASDAQ-100 Index ETF (HXQ.TO)
- iShares NASDAQ-100 Index ETF (CAD-Hedged) (XQQ.TO)
- Invesco NASDAQ-100 Index ETF (QQC.TO)
- Invesco NASDAQ-100 Index ETF (CAD-Hedged) (QQC-F.TO)
- BMO NASDAQ-100 Equity Hedged To CAD Index ETF (ZQQ.TO)
Horizons NASDAQ-100 Index ETF (HXQ) is a good way for you to gain exposure to the top 100 non-financial publicly traded companies in the US.
The fund’s base currency is the Canadian dollar, and it does not use currency hedging to provide you with a relative degree of stability to investment returns based on currency movements.
Horizons HXQ ETF allocates 49.86% of its assets to the IT industry, 17.27% to the communications services industry, and 14.98% to consumer foods. HXQ trades at a low MER as well.
iShares NASDAQ-100 Index ETF (CAD-Hedged) (XQQ) uses currency hedging to provide you with relative stability when it comes to investment returns by eliminating currency exchange rate volatility.
iShares XQQ ETF is a hugely popular ETF, boasting an AUM of $1.62 billion at the time of writing.
The fund comes at a higher cost than many others listed in this guide due to its hedging. iShares XQQ ETF allocates 50.69% of its assets to the IT industry, 16.55% to the consumer discretionary industry, and 16.01% to the communications sector.
Invesco NASDAQ-100 Index ETF (QQC) seeks to provide you with investment returns based on the performance of companies that are a part of the NASDAQ-100 Index.
QQC ETF is an unhedged ETF. It means that your investment returns from QCC ETF may vary drastically depending on the currency exchange rate performance of the Canadian dollar against the US dollar.
Invesco QCC ETF is a very new fund listed on the TSX, launched on May 7, 2021. QQC ETF boasts a low cost compared to other ETFs in the list.
QQC ETF allocates 50.63% of its assets to the IT industry, 16.38% to the consumer discretionary sector, and 15.96% to the telecom sector.
Invesco NASDAQ-100 Index ETF (CAD-Hedged) (QQC.F) is effectively the CAD-hedged version of QQC ETF.
The fund invests directly or indirectly in equity securities that comprise the NASDAQ-100 Index.
QCC.F ETF uses currency hedging to eliminate any volatility caused by changing currency exchange rates by hedging the performance of the US-listed equity securities to their Canadian dollar valuation.
The sector weighting of the fund shows that it allocates over half (50.63%) of its assets to the IT sector, 16.38% to the consumer discretionary industry, and 15.96% to the telecom sector.
BMO NASDAQ-100 Equity Hedged To CAD Index ETF (ZQQ) is another massive Canada-listed fund that has been designed to replicate the performance of the NASDAQ-100 Index.
The fund invests in and holds the constituent securities of the index in the same proportion as they are reflected in the index.
BMO ZQQ ETF hedges the US dollar currency exposure back to the Canadian dollar by using currency hedging to eliminate volatility caused by changing currency exchange rates.
It is one of the largest Canada-listed ETFs that tracks the NASDAQ-100 Index. ZQQ ETF boasts a $1.34 billion market capitalization. It is one of the costliest ETFs among its Canada-listed peers due to the cost of currency hedging.
Vanguard is one of the most significant ETF providers in the country, and it has played a pivotal role in bringing the investment vehicle to the mainstream.
It would be natural to assume that Vanguard would likely boast an ETF among its impressive portfolio of ETFs that would be tracking the NASDAQ-100 Index. Surprisingly, Vanguard does not offer a NASDAQ-100-tracking fund that you could consider adding to your portfolio.
Investing in ETFs to track the performance of the NASDAQ-100 Index is possible for both hedged and unhedged strategies. Currency hedging is a strategy used by fund managers to remove currency fluctuations from the equation when you invest in international securities.
Currency-hedged ETFs are designed to provide you with protection from currency risk. Currency risk affects Canadian investors when the Canadian dollar strengthens against the US dollar, reducing the value of your assets held in the foreign currency.
Currency-hedged ETFs can be useful because the funds remove the uncertainty that comes with currency exchange rate fluctuations. However, the Canadian dollar has historically remained weak against the US dollar.
Investing in the best Nasdaq ETFs in Canada that are unhedged to the Canadian dollar might be a better way to gain exposure to publicly listed US companies that comprise the NASDAQ-100 Index.
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
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To learn more, check out my full breakdown of the best trading platforms in Canada.
Investing in the US stock market could be an excellent approach to realizing wealth growth through exposure to the booming US economy. The best Nasdaq ETFs in Canada offer you the opportunity to enjoy investment returns based on the performance of the top 100 non-financial US equity securities.
Investing in ETFs that track the NASDAQ-100 Index gives you exposure to a narrowed-down list of 100 US-listed equity securities. If you want to gain exposure to a broader market index that covers more US-listed equity securities, you could consider investing in ETFs tracking the S&P 500 Index.
Check out my list of the best S&P 500 ETFs in Canada to explore a list of investment vehicles suitable for this purpose.