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Top Nasdaq 100 ETFs by Cost and Performance
Cost-Effective Options for Tracking Nasdaq 100
ETFs (Exchange-traded funds) offer investors an efficient way to track the performance of the Nasdaq 100 index, which represents 100 of the largest non-financial companies listed on the Nasdaq exchange. With various ETFs available, choosing the best option can be overwhelming. This article will guide you through the key factors to consider when selecting Nasdaq 100 ETFs, including cost and performance.
Key Considerations for Selecting Nasdaq 100 ETFs
Ongoing Charges
Ongoing charges, also known as expense ratios, are an important factor to consider when evaluating ETFs. These charges cover the costs of managing the fund and are expressed as a percentage of the fund's assets. Lower expense ratios translate into higher returns for investors over the long term.
Tracking Performance
The tracking performance of an ETF measures how closely it follows the underlying index. ETFs use various methodologies to track the index, and some may have tracking errors due to factors such as rebalancing and fees. Choosing an ETF with a low tracking error ensures that its returns are aligned with the Nasdaq 100 index.
Investment Strategy
ETFs can employ different investment strategies, such as full replication, sampling, or synthetic replication. Full replication ETFs invest in all the stocks in the underlying index, while sampling ETFs track the index by investing in a representative sample of the stocks. Synthetic ETFs use derivatives to replicate the index's performance.
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