Investing in an exchange-traded fund (ETF) can be a safe, balanced way to invest in stocks. They’re not always known for producing great returns but there’s one ETF that’s been on fire of late – the BMO NASDAQ 100 Equity Hedged to CAD Index ETF (TSX:ZQQ).
The ETF is up around 30% in just the last three months as the markets have been recovering from the market crash that took place in March due to COVID-19.
When the NASDAQ does well, so, too, does the NASDAQ 100 ETF. And rather than trying to figure out whether Facebook (NASDAQ:FB) will outperform Microsoft (NASDAQ:MSFT) or some other tech stock, investors can just invest in the ETF and gain exposure to all of the top tech stocks on the NASDAQ.
However, with social media companies coming under pressure of late and the markets starting to show signs of weakness again with COVID-19 cases rising in the U.S., the NASDAQ may not be looking all that safe.
The ETF is near its 52-week high for the year and with a possible correction around the corner, now may be a good time for investors to drop the investment from their portfolios.
There are many other ETFs to choose from right now that are more diversified and that could be much better buys. Hanging onto tech stocks as their valuations are sky-high could be a danger position to be in.
Over the long term, the NASDAQ is a safe place to invest in but if you’re not willing to hang for several years, you may want to consider selling this ETF today.
