These Hot ETFs Could Heat Up More in August | ETF Trends

The summer months sit squarely in the weaker six-month period for stocks, but that seasonality doesn’t appear to be affecting stocks, as broad market benchmarks are currently on multi-month winning streaks.

That includes the Nasdaq-100 Index (NDX), which as of the end of July, is higher by 44% year-to-date. Obviously, that’s excellent news for the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) — the marquee exchange traded funds tracking the Nasdaq-100.

Clearly, those ETFs are on scintillating paces this year, supported in large part by the strength of the magnificent seven. Conversely, August historically isn’t the best month of the year for stocks. It’s not the worst, either, but that “split decision” could be confusing for newer investors. Good news: History bodes well for QQQ and QQQM in August.

Some NDX Stocks Thrive in August

Several QQQ and QQQM member firms, including some that have already notched big gains this year, rank among the best-performing S&P 500 stocks over the past decade. Among large QQQ/QQQM components, Nvidia (NASDAQ: NVDA) averaged an August gain of 7.55% over the past decade, according to Schaeffer’s Investment Research.

Even with Nasdaq’s recent special rebalance of NDX, Nvidia remains the third-largest tech holding in QQQ and QQQM at a weight of 4.35%. While healthcare is often overshadowed in relation to QQQ and QQQM, the sector accounts for about 7% of the ETFs’ rosters. Dexcom (NASDAQ: DXCM), one of the ETFs’ healthcare holdings, is also one of the top-performing S&P 500 stocks in the eighth month of the year, averaging a stellar return of 12.52%, noted Schaeffer’s.

Regarding more familiar QQQ/QQQM components and August history, Facebook parent Meta Platforms (NASDAQ: META) — hot in its own right this year — posted an average August gain of 3.56% over the past decade.

QQQ and QQQM allocate less than 5% of their weights to the industrial sector, but one of the stocks hailing from that group that also resides in the Invesco ETFs is Cintas (NASDAQ: CTAS). That stock, which accounts for 0.41% of the ETFs’ portfolios, averaged an August gain of 2.73%.

In potentially more good news for QQQ and QQQM, Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), which combine for 21% of the funds’ rosters, are also among the S&P 500 leaders in August. So are Netflix (NASDAQ: NFLX) and Synopsys (NASDAQ: SNPS), both of which are QQQ/QQQM holdings.

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