As investors gear up for 2026, a strategic approach to tech stocks and exchange-traded funds (ETFs) is crucial for tapping into growth opportunities. The tech sector has demonstrated remarkable performance over the past decade, significantly outperforming other sectors of the U.S. economy. While individual tech stocks can yield substantial returns, many investors might find that tech-focused ETFs offer a safer yet lucrative alternative.
Among the options available, one standout is the Invesco Nasdaq 100 ETF (QQQM), launched in 2020. This ETF tracks the Nasdaq-100 index, which includes the 100 largest non-financial stocks on the Nasdaq stock exchange. Although QQQM is a sibling of the more established Invesco QQQ Trust ETF, it boasts a lower expense ratio of 0.15% compared to QQQ’s 0.20%. Although this small difference may seem negligible at first glance, it can accumulate to significant savings for long-term investors, potentially saving hundreds or thousands of dollars as investments grow.
While QQQM is not exclusively a tech ETF, it predominantly comprises tech companies, which make up approximately 65% of its holdings. Other sectors in the fund include consumer discretionary, healthcare, telecommunications, and industrials. Investing in QQQM provides exposure to leading tech giants such as Nvidia, Amazon, Microsoft, and Apple, along with rising stars like Palantir Technologies and CrowdStrike. This diversified exposure helps mitigate risk, allowing investors to hedge against potential downturns in the tech sector with stability from other industries.
In contrast, investors might want to steer clear of the Vanguard Information Technology ETF (VGT) at the moment. Although VGT has delivered impressive returns over the last decade and has even outperformed the Nasdaq-100, it is heavily concentrated in just three stocks: Nvidia, Apple, and Microsoft, which collectively account for over 45% of the ETF’s portfolio. This concentration has driven its past performance, but it also poses risks; continued strong returns depend significantly on the ongoing success of these three companies.
Another limitation of VGT is its narrow focus on the information technology sector, excluding significant players typically associated with technology but classified under different sectors. For instance, VGT omits Amazon and Alphabet, which are categorized under consumer discretionary and communication services, respectively. Given the integral role these companies play in the tech landscape, their absence from a tech-focused ETF could be detrimental for investors seeking comprehensive exposure to the industry.
As the investment landscape shifts into 2026, QQQM emerges as an appealing option for those looking for a balanced exposure to technology, while VGT may be less desirable due to its concentrated holdings and exclusion of key tech players. Making informed decisions now could position investors for substantial growth in the new year.
