Palantir Technologies (PLTR), MicroStrategy (MSTR) and Axon Enterprise (AXON) will join the Nasdaq-100 next week, replacing Super Micro Computer (SMCI), Illumina (ILMN) and Moderna (MRNA).

Shares of the incoming trio are having mixed reactions to the announcement. MicroStrategy is in the lead, up 4% at last check, as inclusion in the Nasdaq-100 often boosts stocks due to demand from index-tracking funds, including the ever-popular Invesco QQQ Trust (QQQ). MicroStrategy stock is also benefiting from bitcoin's new record high of $106,000 over the weekend.

The rebalance of the Nasdaq-100 index will occur ahead of the market open on Monday, December 23.

What Wall Street thinks about Palantir, MicroStrategy and Axon

Palantir, a tech company that specializes in big data analytics, has been one of the market's best-performing stocks in 2024 with a return of more than 340% in the year to date.

However, Wall Street thinks the tech stock has gotten ahead of itself as the consensus recommendation among the 20 covering analysts S&P Global Market Intelligence tracks is a Hold. Additionally, analysts' average target price for PLTR stock is $41.77, representing a discount of more than 40% to current levels.

But not everyone is on the sidelines when it comes to Palantir. Financial services firm Wedbush is one of the most bullish firms on PLTR with an Outperform rating (equivalent to a Buy) and a $75 price target.

"We are raising our price target on Palantir from $57 to $75, reflecting our increased confidence in the game-changing AIP strategy with use cases for artificial intelligence taking hold over the next 12-18 months," wrote Wedbush analyst Daniel Ives in a November 24 note. "The Messi of AI growth story will see unprecedented demand as more enterprises realize the value of PLTR's entire product suite with more AI use cases."

MicroStrategy, an enterprise software company that has become a bitcoin proxy due to its significant holdings in the cryptocurrency, has posted a jaw-dropping return of over 500% in the year to date.

Wall Street thinks the large-cap stock is going even higher from here with an average price target of $518.68, representing implied upside of about 24% to current levels. Additionally, the consensus recommendation is a Strong Buy.

Financial services firm Bernstein is the most bullish outfit on MSTR stock with an Outperforming rating (equivalent to a Buy) and a $2,890 price target.

"Since August 2020, MSTR has transformed from a small software company to the largest bitcoin holding company, owning 1.1% of world’s bitcoin supply worth roughly $14.5 billion," says Bernstein analyst Gautam Chhugani in a note this morning. "MSTR's founder chairman, Michael Saylor, has become synonymous with brand bitcoin and has positioned MSTR as a leading bitcoin company, attracting at-scale capital (both debt and equity) for an active bitcoin acquisition strategy."

Axon, a company that provides safety and security technology for law enforcement including tasers and body cameras, has risen more than 140% in the year to date, and Wall Street still rates it a Strong Buy. However, analysts' price targets have failed to keep up with the quick-rising growth stock as the average analyst estimate of $598.08 represents a discount of just over 3% to current levels.

Financial services firm Argus has a Buy rating and $800 price target on AXON stock.

"We expect AXON shares to continue to outpace the broader market, driven by the company's strong management team and robust earnings prospects as demand for its products and solutions remains strong," wrote Argus analyst John Staszak in a December 4 note. "We think that Axon can continue to generate positive earnings surprises based on its relatively cautious forecasts."

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Why struggle to find a needle in a haystack when you can buy the haystack? That was Vanguard founder Jack Bogle's argument for indexing nearly half a century ago when he launched the first index fund for individual investors.

The investment approach was easy to execute and offered instant diversification, all for a low fee. As it turns out, returns have been tough to beat.

Index mutual funds and exchange-traded funds (ETFs) have done better, on average, than most actively managed funds for years. The Vanguard 500 Index Fund (VOO), which mirrors the S&P 500 Index, has outpaced 90% of similar U.S. stock funds in the past 15 years, according to Morningstar.

Today, index funds account for more than half of assets in diversified U.S. stock mutual funds and exchange-traded funds, up from one-third of assets a decade ago. Now, "there's an index-based strategy for whatever an investor wants to get exposure to," says Todd Rosenbluth, head of research at financial data firm VettaFi.

We're still fans of active funds, of course, albeit selectively. But on average, active managers have found it tough to beat the S&P 500, which has made indexing a popular strategy. "That's why we prefer index investing over active," says Alvin Carlos, an adviser in Washington, D.C. "We don't want to invest in a losing strategy."

In recent years, however, this simple investing strategy has become more complicated, and education has failed to keep up.

"Fifteen years ago, indexing was about just measuring the broad market," says Aniket Ullal, head of exchange-traded fund data and analytics for CFRA Research. Then came designer index funds, or funds that track customized benchmarks with the goal of beating the traditional bogeys. Now, complex options-based strategies are hitting the market.

Some index funds "can be tricky even for the most sophisticated investors to understand," says Ullal.

To help you master the art of indexing, use our guide to explore different parts of the indexing world for both stocks and bonds. The choices range from traditional broad-market funds to funds that zero in on certain investing styles and strategies or particular market themes to complex offerings that bear little resemblance to Bogle's big idea.

Traditional stock index funds

Funds in this category have two defining traits: They track a broad, well-known index, such as the S&P 500, the Nasdaq-100 or the MSCI EAFE, and they weight portfolio holdings by stock market value. The bigger a company's market capitalization, the bigger its position in the fund.

What you see in the index is what you get in the fund, which is why traditional index funds are good choices for your core portfolio. "That's the nice thing about indexing," says Chris Huemmer, senior investment strategist at FlexShares ETFs. "It's all rules-based, so there's no strategy drift."

Even so, take the time to understand exactly what kind of index fund you're buying, the rules that govern its underlying holdings and how it has behaved in past markets.

"Two products may have similar names and objectives but own different stocks," says Rachel Aguirre, head of product and portfolio strategy at Vanguard.

Consider, for example, three small-company index funds: the iShares Russell 2000 ETF (IWM), the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM) and the Vanguard Small Cap Index Fund ETF (VB). Each fund tracks a different index, so performance varies.

Companies in the Vanguard portfolio, for instance, are, on average, twice as large by market value as those in the other two funds. That's helped the Vanguard fund perform better on an annualized basis in the past five and 10-year time frames because bigger companies outperformed small ones.

Similarly, companies in the SPDR fund are more profitable overall compared with holdings in the other two funds because its index, the S&P SmallCap 600, limits constituents to firms with profits. That helped the SPDR ETF outperform the other two small-company funds in 2021.

Another tip: Stick with the same index family if you're buying individual funds to get large-, small- and midsize-company exposure. Pair an S&P 500 index fund, for instance, with an S&P SmallCap 600 index fund to avoid any overlap in stock holdings. We did that in the Kiplinger ETF 20, our favorite exchange-traded funds, matching the iShares Core S&P 500 ETF (IVV) with the iShares Core S&P Mid-Cap ETF (IJH) and the iShares Core S&P Small-Cap ETF (IJR).

Investors who prefer mutual funds should consider the Fidelity 500 Index (FXAIX) or the Schwab S&P 500 Index (SWPPX) for large-cap exposure. Otherwise, invest in a total market fund, which owns nearly every publicly traded stock. The Vanguard Total Stock Market trades as a mutual fund (VTSAX) and an ETF (VTI).

Strategic index funds: thematic funds

These funds also aim to beat a broad benchmark, but they come with a twist. Funds that aren't weighted by market cap fall into this category, for instance. The main types of strategic funds are focused on factors (defined as stock or company traits that have been proven to drive returns), company fundamentals or a thematic trend.

We'll start with factor funds. There are six main factors: value (inexpensive stocks), size (small-cap stocks, say), momentum (stocks with upward-trending prices), volatility (stocks with low price fluctuations), quality (financially healthy firms) and yield (dividend-paying stocks). Invest in these funds alongside your core holdings to enhance returns or reduce risk.

Factors can take years to pay off. That's why these funds are best considered long-term, buy-and-hold investments, says Nick Kalivas, head of factor and core equity product strategy for Invesco ETFs. Size and value, for instance, win over multiple decades. "Ten years is too short," he says. Quality, value and momentum, on the other hand, can reward in five-plus years.

But factor investing has some quirks. The strategies don't all work — as in outperform the indexes — at the same time. When the economy is contracting, low-volatility, value and quality factors outperform, and momentum and size tend to lag. During an economic recovery, size, value and quality fare best; momentum and volatility lag.

You can find funds that focus on a single factor — Fidelity and BlackRock's iShares each have several, to name just two shops. Some funds group factors because they pair well. Momentum and low volatility, for instance, work well together. Quality and value are good pairs, too.

But the jury is out on whether you should own all the factors at once — Invesco's Kalivas says yes because it adds diversification benefits; FlexShares' Huemmer says no because it could water down returns.

That's why we favor a flexible approach. The Invesco Russell 1000 Dynamic Multifactor ETF (OMFL) stresses different factors depending on whether the economy is expanding, slowing down, contracting or recovering. The fund has outpaced the S&P 500 since its November 2017 inception and boasts a better risk-adjusted return, but it has been more volatile, too.

Equal-weight funds are factor funds because they emphasize size, in a way — every company, small or large, gets an equal share of assets. They're a way to avoid overweighting the most popular stocks of the day.

Remember, over shorter periods, performance can be choppy. In the past 12 months, the Invesco Russell 1000 Equal Weight ETF (EQAL) and the Russell 1000 Index are neck and neck in terms of returns, but in late March, the two were roughly nine percentage points apart for the year to date.

Although the Invesco S&P 500 Equal Weight ETF (RSP) has beaten the S&P 500 Index since its April 2003 inception, it has lagged in the past three, five, 10 and 15 years.

With fundamentals funds, business metrics, such as revenue and free cash flow (a company's cash from operations after capital expenditures), matter most.

The Invesco S&P 500 Revenue ETF (RWL), for instance, ranks stocks by trailing 12-month revenue and rebalances every quarter. Walmart (WMT) and Amazon.com (AMZN) are top holdings. The fund has slightly outperformed the S&P 500 since its February 2008 inception.

The WisdomTree U.S. LargeCap Fund (EPS) holds profitable large stocks ranked by earnings. The fund has slightly lagged the S&P 500 in the past three, five and 10 years.

Companies that throw off cash are the focus of the Pacer U.S. Cash Cows 100 ETF (COWZ). Stocks are ranked by trailing 12-month free cash flow. In the past five years, the fund has underperformed the S&P 500 by 2 percentage points.

Finally, the Schwab Fundamental U.S. Large Company Index (ETF ticker symbol FNDX; mutual fund symbol SFLNX) tracks an index that ranks stocks using a combination of sales, cash flow and dividends plus buybacks. The fund lagged the Russell 1000 in the past three and 10 years, but it beat on a one- and five-year basis. Fit funds such as these into your portfolio as complements to your core holdings to boost returns.

Strategic index funds: factor funds

Funds that fall into the thematic subcategory let you follow your passion. These days, whatever your interest, you can find an ETF that captures the trend.

There's one for music lovers, the MUSQ Global Music Industry Index ETF (MUSQ), and one for pet care — the ProShares Pet Care ETF (PAWZ). There are several clean-energy offerings such as the iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF (TAN).

Several are technology related, including the Global X Robotics & Artificial Intelligence (BOTZ) and the Global X Autonomous & Electric Vehicles ETF (DRIV). Some market watchers, including Invesco's Kalivas, count funds that invest according to environmental, social and corporate governance principles in the thematic category.

In most cases, thematic funds are best reserved for money you can afford to set aside for the long haul. "These funds tap growth drivers that will play out over a long time period," says iShares's Aguirre.

Buckle up, because they can be volatile. The Ark Innovation ETF (ARKK), for instance, soared 153% in 2020, only to lose 23% in 2021 and another 67% in 2022. It rose 35% in 2025 but is flat so far in 2026 through mid-April after being down as much as 17% for the year to date in March.

Quasi-index funds

The lines between index funds and active funds are blurring. Some consider the strategies we describe below as actively managed. But their outcomes are tied to an index, so we consider them quasi-index funds.

Buffered ETFs. Investors who want to stay invested in stocks but can't afford — or stomach — big downdrafts are flocking to "defined outcome" funds, also called buffered ETFs, which invest in options tied to a broad index.

The ETFs offer some protection from stock market losses over a 12-month period in exchange for a cap on potential gains. How much you give up in returns (the cap) depends in part on the amount of downside protection (the buffer) the fund offers. The bigger the buffer, the lower the cap.

Most buffered ETFs are linked to the S&P 500 Index, but some are tied to the Nasdaq-100, the Russell 2000 or the MSCI EAFE, among others. At the end of the one-year period, the fund resets by buying new options that will define the buffer and cap parameters in the next 12-month period. That's why these funds typically have a month tied to their name. But you can buy and hold these funds if you like; there's no termination date.

Look for buffered ETFs from Innovator, First Trust, AllianzIM, TrueShares and Pacer. Be sure to buy shares in a defined-outcome ETF within a week of the start of its 12-month stretch to benefit from the fund's full downside buffer.

In late April or early May, for example, buy a May-dated ETF. Stay invested for at least the full year. For investors who don't buy at the start of the period, the buffer and cap shift a bit depending on the fund's net asset value each day.

Direct indexing. This strategy once was reserved for high-net-worth individuals, largely to goose after-tax returns. It's now accessible to regular investors, thanks to free and fractional-share stock trading, as well as lower minimums to invest.

In direct indexing, also called "personalized indexing," you directly own the individual stocks of an index (or a representative set; more on that later). Plus, you can tweak your holdings to suit your needs or values. If you work for Apple (AAPL), say, and don't want or need added exposure to the stock, you can exclude it from your personalized index.

Tax-loss harvesting, which aims to reduce your capital gains tax, is key to direct indexing. Say you're tracking the S&P 500, and Exxon Mobil (XOM) shares trade at a loss in your portfolio. With tax-loss harvesting, you would sell the shares — locking in losses to offset gains in other investments — and replace Exxon with a stake in a different but similar index stock, say Chevron (CVX), to maintain proper allocation in your portfolio.

"The end result is less of your money goes to taxes, and more stays invested and working for you," says Eric Walters, an adviser in Greenwood Village, Colorado. You wouldn't own every stock in the benchmark index when you use direct indexing — otherwise you'd limit your options to reinvest in a similar security, according to IRS rules.

Tax-loss harvesting can add up to 0.5 to 1.5 percentage points a year in returns by reducing taxes, adds Walters. The more money you have in the portfolio, the more effective the strategy, and it only works in a taxable account.

Not everyone is a believer. "You can gain tax benefits, but you risk underperforming, too," says Carlos, the Washington, D.C., adviser. Some advisers say you need to invest at least $2 million to make direct indexing worthwhile. Others say only the wealthiest investors — those in the highest tax bracket or those who know they will leave the account to their heirs — should consider it. Fees are between 0.2% and 0.4% of assets per year.

If you're interested, consider going with an adviser who offers the service. Not all do. "It's an extra expense and takes time, so the client has to really care about it," says Eric Figueroa, a certified financial planner in Folsom, California. Minimums range from $25,000 to $250,000 or more. Figueroa prefers that clients have at least $50,000.

Some brokerage firms offer personalized indexing services, too. Fidelity's Managed FidFolios have a minimum of $5,000 and charge a 0.4% fee. At Schwab, the minimum is $100,000, and fees are 0.4% for balances below $2 million. You must work with a Schwab financial consultant.

Bond indexing

Indexing with bonds hasn't received as much attention as stock indexing. That might be because historically, most actively managed bond funds have outpaced their benchmark, at least over long hauls.

But that's changing. In 2022, the worst year for fixed income in decades, bond index funds fared better than their active counterparts. In more recent years, investors rushed headlong into bond funds, particularly passive ones, as higher yields made fixed-income investing more attractive.

That said, bond indexing comes with some caveats. Rather than hold every security in the bogey they track the way stock index funds do, bond index funds hold a sampling. Sometimes, that can drive up tracking error (the divergence between the return of the fund and the return of the index it tracks).

Unlike an individual bond that you buy and hold to maturity, bond fund yields can shift as the mix of securities in the portfolio changes and as interest rates fluctuate (because bond prices and yields move in opposite directions).

Traditional offerings. Traditional bond index funds are weighted by market value of debt. The U.S. bond market yardstick is the Bloomberg U.S. Aggregate Bond Index, better known as the Agg.

It was "never meant to be a comprehensive market benchmark," says Jason Bloom, Invesco's director of global ETF strategy. It's not diversified, for a start. Nearly 70% of the index is made up of government and government-agency bonds. and it excludes some key sectors, including high-yield debt.

That said, an Agg-based index fund works as a core holding. Our favorites are the Fidelity U.S. Bond Index Fund (FXNAX), which yields 4.3%, and the iShares Core U.S. Aggregate Bond ETF (AGG), which yields 4.4%.

Fill in the gaps of the Agg by peppering your portfolio with small doses of bank loans, high-yield corporate credit and even preferred securities (bond investments with stock-like features) to boost your return over time.

For high yield, we favor the State Street SPDR Portfolio High Yield Bond ETF (SPHY), which yields 7.1%. Our favorite floating rate fund is the Invesco Senior Loan ETF (BKLN). It yields 6.6%. For preferred stock ETFs, we like the iShares Preferred and Income Securities ETF (PFF), which yields 6.3%.

Factor funds for bonds. It's a new-ish category, so there aren't many factor-based bond funds. But we found a few we like.

The FlexShares High Yield Value-Scored Bond Index Fund (HYGV) and the iShares High Yield Systematic Bond ETF (HYDB) emphasize securities that score well on quality and value measures, though their approaches are different. In the past five years, both funds outpaced the typical high-yield bond fund. The FlexShares fund yields 8.0%; the iShares fund, 6.8%.

Securities in the ultra-short-term bond fund Fidelity Low Duration Bond Factor ETF (FLDR) are weighted by interest rate sensitivity. Over the past year, the fund's 5.3% return outpaced 93% of other ultra-short bond funds. It yields 4.1%.

The Invesco Fundamental Investment Grade Corporate Bond ETF (PFIG) relies on book value (assets minus liabilities), sales, dividends and cash flow to weight securities. Over the past five years, the fund beat 70% of corporate bond funds. It yields 4.2%.

Laddering for income. To smooth out current income, some investors build a bond ladder, which involves buying bonds that mature at increasing intervals, say, every year in the next 10 years. As each bond matures, you reinvest the principal in the long end of the ladder.

Now, thanks to Invesco and iShares, you can build a bond ladder with index ETFs. These target-maturity funds, dubbed Invesco BulletShares and State Street MyIncome, offer instant diversification and more liquidity than you'd get by buying individual bonds.

You can invest in a ladder of investment-grade corporate debt or high-yield IOUs with Invesco BulletShares funds. Maturity dates stretch through 2035. The State Street MyIncome suite has a Treasury track or an investment-grade corporate debt track, with maturity dates that fall through 2035.

Should you choose an ETF or mutual fund?

Should you go with an exchange-traded or mutual index fund? It's largely a matter of personal preference.

Mutual funds and ETFs are both easy to trade and offer diversified exposure to a swath of the market in one step. They both pool assets from shareholders and invest in diversified baskets of stocks or bonds or other assets. Both ETFs and mutual funds charge an annual expense ratio. But they differ in key ways, too.

Trading. Mutual fund trades are executed once a day, after the market closes. In some cases, you might have to pay a transaction fee to purchase shares in a mutual fund. ETF shares trade during the trading day, just as stocks do, for no fee at most brokers.

Minimums. Some mutual funds have no minimums. But the initial investment for a Vanguard index fund is $3,000. No ETF is that pricey — the minimum is the price of one share.

Expense ratios. ETFs have lower expense ratios than mutual funds, generally speaking. Part of the reason is that most ETFs are index funds, which are less expensive to run than actively managed funds. But ETFs also don't incur certain expenses that mutual funds do, such as fees paid to list the mutual fund on a brokerage firm's no-transaction-fee platform, for instance.

Capital gains distributions. ETFs are structured to be more tax-efficient than mutual funds. ETFs don't actually buy and sell the underlying securities in their portfolios; third parties called authorized participants do it for them. Because an ETF isn't making actual cash transactions, it's less likely to make capital gains distributions to share­holders. (You still owe capital gains taxes when you sell shares.)

That's not the case with a mutual fund. If a mutual fund sells a security in its portfolio and pockets a profit, it is required to pass on those gains to shareholders at least once a year in the form of a capital gains distribution. This doesn't apply if you hold the fund in an IRA or a 401(k). These investments are shielded from tax until you withdraw from the account. But if you hold the fund shares in a taxable account, you're vulnerable to an unexpected tax bill.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance, but has since been updated. Subscribe to help you make more money and keep more of the money you make here.

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Summary: The best growth ETFs to buy are those that hold companies expected to grow faster than peers based on one or more fundamental measures, including earnings per share and return on equity. Growth ETFs tend to have outsize exposure to stocks in the technology, communication services and consumer discretionary sectors. Seek out large-cap growth ETFs with low costs and high liquidity.

Besides segmenting by size, such as small-cap stocks or large-cap stocks, and the sector type, including those defined under the Global Industry Classification Standard (GICS), investors can distinguish between two investing styles: value vs growth.

Value investing is associated with legendary investors such as Benjamin Graham and Warren Buffett. The approach has deep academic roots thanks to Eugene Fama and Kenneth French, who studied the value factor.

But growth has dominated performance since the Great Recession. Even broad, core benchmarks like the S&P 500, designed to blend value and growth, lean heavily toward growth today.

Nowhere is this clearer than in the outsized role of tech stocks, representing more than 30% of the index. And then you have top-heavy composition driven by the so-called Magnificent 7 stocks: Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).

For investors looking to double down on the growth style, options exist outside of broad market indices. Growth exchange-traded funds (ETFs) are one of the simplest ways to capture this factor tilt.

How do growth ETFs work?

Growth ETFs can be rules-based, tracking an index with objective criteria for screening and weighting stocks or actively managed by analysts using research and models. In either case, the goal is to select companies expected to grow faster than peers based on one or more fundamental measures.

A common screen, for instance, is historical or forecasted earnings-per-share (EPS) growth. It's popular because earnings growth often drives long-term stock performance.

But it's not foolproof. Backward-looking EPS may reflect cyclical booms rather than durable growth, while forward-looking EPS depends on analyst forecasts and company guidance that can prove optimistic.

Another frequently used metric is return on equity (ROE), which measures how effectively a company generates profit from shareholders' equity. ROE is calculated by dividing net income by shareholder equity, with growth-oriented companies often sustaining double-digit ROE, signaling strong profitability and efficient capital use.

Valuation also comes into play. Growth investors often look at the price-to-earnings growth (PEG) ratio, which adjusts the traditional P/E ratio by factoring in expected earnings growth.

A PEG around 1.0 is often considered reasonable — suggesting a stock is fairly priced for its growth rate — while much higher ratios may indicate overvaluation.

Growth vs value

The line between growth and momentum investing can blur. Some growth ETFs incorporate technical analysis, targeting stocks trading above moving averages or relative strength indicators. The idea is that the "trend is your friend" and that investors should "let winners run."

Growth ETFs over the past decade have tended to share several characteristics:

• Heavy concentration of large-cap and mega-cap stocks in the top holdings.
• Overweight to cyclical yet innovative sectors such as technology, consumer discretionary stocks and communication services stocks.
• Lower or nonexistent exposure to dividend-paying stocks and dividend yields, because many growth companies prefer to reinvest cash into expansion rather than pay shareholders.

They hold regardless of which investing style — growth or value — is used.

How we picked the best growth ETFs

The first step in narrowing the universe of growth ETFs was deciding what to exclude. Actively managed growth funds were taken off the list. While some can beat their benchmarks in hindsight, the odds are stacked against doing so consistently.

S&P's SPIVA study shows that nearly 90% of large-cap growth funds underperformed the S&P 500 Growth Index over a 15-year period. Much of this gap is explained by higher fees, which compound year after year and create a structural drag on performance.

We also limited our picks to large-cap growth ETFs. Academic research and investing experts, including Larry Swedroe, have described small-cap growth strategies as "a black hole." This is an anomaly, since the size factor typically implies stronger returns.

But small-cap growth stocks often combine the worst traits of both categories: limited profitability, stretched valuations and higher volatility without the historical return premium of small value.

From there, we applied three practical filters:

Fees. We set a maximum expense ratio of 0.20%. Growth funds are a highly competitive category in 2026, so there is little justification for paying higher fees.

Liquidity. We focused on ETFs with 30-day median bid-ask spreads of 0.1% or less. This ensures investors can trade efficiently without losing performance to transaction costs.

Assets under management. Finally, we required at least $1 billion in assets for economies of scale and investor trust.

Here are five of the best growth ETFs to consider for your portfolio.

Data is as of June 6.

• Assets under management: $93.6 billion
• Expense ratio: 0.15%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 26.5%

The Invesco NASDAQ 100 ETF (QQQM) is the smaller, buy-and-hold counterpart to the Invesco QQQ Trust (QQQ). It trades at a lower price per share and carries a 0.05% lower expense ratio, making it better suited for long-term investors rather than active traders, since it doesn’t offer the same robust options market as QQQ.

Both ETFs track the Nasdaq-100 Index, which consists of the 100 largest non-financial companies listed on the exchange and weights them by modified market capitalization using listed shares rather than float-adjusted shares, with caps to limit concentration.

In practice, that results in a heavy tilt toward technology stocks, though the Nasdaq's history of attracting innovative listings means a notable presence of healthcare names, particularly in biotechnology.

Learn more about QQQM at the Invesco provider site.

• Assets under management: $393.8 billion
• Expense ratio: 0.03%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 27.26%

The Vanguard Growth ETF (VUG) holds 153 stocks that make up the CRSP US Large Cap Growth Index. Unlike QQQM, it does not exclude financials, so investors gain exposure to names such as Visa (V) and Mastercard (MA).

The growth tilt is clear in its fundamentals, with an average return on equity of 36.1% and average earnings growth of 33.4%.

Still, valuations run high. On average, portfolio companies trade at 35.2 times earnings and 11.7 times book value.

The fund also has a pronounced technology bias, with 67.8% of assets in the sector. Apple, Nvidia and Microsoft account for more than 33% of the ETF's total weight.

Learn more about VUG at the Vanguard provider site.

• Assets under management: $126.9 billion
• Expense ratio: 0.18%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 26.24%

Many older growth mutual funds use the Russell 1000 Growth Index as their benchmark to beat, making iShares Russell 1000 Growth ETF (IWF) a popular "buy the haystack" option for ETF investors. The portfolio includes 386 companies, offering similar exposures and metrics as VUG but in a slightly more diversified format.

The familiar growth tilts remain. Technology stocks make up 53.38% of assets, and Nvidia, Apple and Microsoft together account for 34.19% of the ETF's weight. Still, performance has been strong.

IWF carries a four-star Morningstar rating, reflecting how it has historically outperformed most of its large-cap growth peers on a risk-adjusted basis.

Learn more about IWF at the iShares provider site.

• Assets under management: $53.57 billion
• Expense ratio: 0.04%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 29.24%

The same S&P 500 Growth Index that many active managers struggle to beat can be accessed at minimal cost through the SPDR Portfolio S&P 500 Growth ETF (SPYG).

SPYG elects the growth half of the S&P 500, resulting in 147 holdings best aligned with growth criteria. The fund projects an estimated 3- to 5-year EPS growth rate of 21.2%.

The familiar style tilts are present but less pronounced than in other growth ETFs. Nvidia, Apple and Microsoft together account for almost 31% of assets, while technology makes up 52.8% of the portfolio.

A modest 0.42% SEC yield also helps make SPYG a relatively tax-efficient option for taxable accounts.

Learn more about SPYG at the SPDR provider site.

• Assets under management: $58.78 billion
• Expense ratio: 0.04%
• 30-day median bid-ask spread: 0.03%
• 3-year annualized total return: 26.55%

The Schwab U.S. Large-Cap Growth ETF (SCHG) delivers broad growth exposure similar to IWF but at a much lower cost.

SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, which includes 198 holdings. On average, portfolio companies show a return on equity of 33.86%, reflecting strong profitability.

As with other growth ETFs, familiar tilts remain, though less extreme than in VUG or IWF. Nvidia, Apple and Microsoft together account for almost 29% of the fund, while technology stocks make up just under 45% of assets.

Tax efficiency is also decent. Schwab estimates a three-year after-tax, pre-liquidation return of 33.36% compared with a 26.53% three-year NAV return.

Learn more about SCHG at the Schwab provider site.

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Thursday's downward momentum spilled liberally into Friday's trade, with almost the entire market working in concert to deliver a week-closing stinker.

Weighing on sentiment again were yesterday's comments by Federal Reserve Chair Jerome Powell that all but guarantee we'll see a 50-basis-point Fed funds rate hike following the central bank's May meeting.

"When a Fed official suggests a 50-basis-point hike, markets immediately start trying to price in 75-basis-point hikes," says Jamie Cox, managing partner for Harris Financial Group. "It's madness really. Most investors would be well served to ignore the machinations of the pricing craziness and wait to see what actually happens with rates."

"The Fed is prepared to inflict real economic pain on the economy to achieve its inflation goals," adds Dean Smith, chief strategist at investment technology platform FolioBeyond.

John Butters, senior earnings analyst at FactSet, notes that the S&P 500 Index is reporting single-digit earnings growth for the first time since the fourth quarter of 2020, thanks in part to tough year-over-year comparisons, but also macro headwinds.

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"[The Fed's] hawkish stance is giving investors pause as many are left to evaluate the impact on profit margins and equity multiples moving forward," says Brian Price, head of investment management for Commonwealth Financial Network. "We're still very early into earnings season, but higher costs are already denting profit margins and there doesn't appear to be any material relief in sight."

Friday's financial-results calendar did little to improve the market's earnings situation.

Gap (GPS, -18.0%) crumbled after reporting a 2-cent-per-share quarterly adjusted loss compared to a 67-cent profit the year prior; it also hacked at its current-quarter sales estimates and announced that Old Navy CEO Nancy Green would be stepping down. Verizon (VZ, -5.6%) beat profit expectations but said full-year earnings would come in at the bottom of its predicted range, which sits below analysts' views.

The major indexes all bled plenty. The Dow Jones Industrial Average (-2.8% to 33,811) saw all of its 30 components finish in the red. The same went for 489 of the stocks in the S&P 500 (-2.8% to 4,271). The broader Nasdaq Composite finished 2.6% lower to 12,839, including tumbles for all but four of the Nasdaq-100's components. (The Nasdaq-100 is made up of the 100 largest non-financial components of the Nasdaq Composite.)

"[The CBOE Volatility Index, or VIX] seems to express widespread fear that the U.S. economy might teeter into a recession," says Michael Oyster, chief investment officer for asset-management firm Options Solutions. "Options investors are confronting the reality that the Fed may have to raise rates even more aggressively than what was expected six months ago."

Other news in the stock market today:

• The small-cap Russell 2000 was hardly immune from Friday's woes, dropping 2.6% to 1,940.
• U.S. crude oil futures fell 1.7% to settle at $102.07 per barrel.
• Gold futures retreated 0.7% to finish at $1,934.30 an ounce.
• Bitcoin swung back below $40k, retreating 4.1% to $39,499.01. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.
• HCA Healthcare (HCA) stock plummeted 21.8% after the Tennessee-based hospital operator lowered its full-year guidance due to higher labor costs. For 2022, HCA now expects earnings per share of $16.40 to $17.60 – down from its previous forecast for earnings of $18.40 per share to $19.20 per share – and revenue of $59.5 billion to $61.5 billion, $500 million lower than its prior guidance. The negative earnings reaction dragged on a number of healthcare stocks, including Universal Health Services (UHS, -14.0%), Tenet Healthcare (THC, -15.7%) and Community Health Systems (CYH, -17.9%).
• Kimberly-Clark (KMB) was a rare splash of green in today's market, with the consumer staples stock jumping 8.1% after earnings. In its first quarter, KMB reported adjusted earnings of $1.35 per share on $5.1 billion in revenue – more than analysts were expecting. The maker of Cottonelle toilet paper also raised its full-year revenue and organic sales growth forecasts. Still, CFRA Research analyst Arun Sundaram maintained a Sell rating on the stock. KMB is "unfavorably positioned versus some of its more diversified peers in navigating through this historic inflationary cycle," the analyst wrote in a note.

Investing Green on Earth Day

April 22 marks the 53rd birthday of Earth Day, which was created to highlight the need for environmental protections. And now, perhaps more than ever, Wall Street is getting involved in these efforts through the promotion of investments boasting strong environmental, social and governance (ESG) policies.

Indeed, even this year's Earth Day theme – "Invest in Our Planet" – reflects the growing corporate and investing community's involvement in maintaining our green-and-blue space marble.

"While from the top down, governments have been grappling with the commitments needed for climate change solutions, from the bottom up, the private sector's innovation and investment have been accelerating needed advances," says Jason Hoody, head of investment manager research and sustainable investing research for LPL Financial. "Sustainable investing has the possibility of leaving a double legacy: There is the legacy of potential returns that every investor seeks, but there is also a legacy of stewardship by meeting current needs without overburdening the environment or future generations."

That double legacy is, of course, the goal: Investors want to do right, but they also want to do well. Which is why ESG investors must thread a tight needle in targeting opportunities that are both good stewards of the world and community around them, as well as attractive investment targets.

To mark 2022's Earth Day, we've looked at five ESG picks that we think fit the bill – each underlying company has made great strides in several environmental areas, and each stock boasts high-quality fundamentals.

Five of the largest and best-known companies in the world are the FAANG stocks.

Or the FAAMNGs. Or the FANTAMANs. Whatever the acronym of the day is.

The original "FANGs" – Facebook, Apple, Netflix and Google – was a clever way to refer to four mega-cap tech stocks. But as other companies grew, and some of the original names changed, this alphabet soup evolved. FANGs became the FAANGs, then morphed into other less popular iterations.

The reason these acronyms stick around is because they collectively have a massive impact on the major U.S. stock market indexes thanks to their size. In fact, seven technology or tech-adjacent mega-caps – Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Facebook parent Meta Platforms (FB), Google parent Alphabet (GOOGL), Netflix (NFLX) and Tesla (TSLA) – account for roughly half of the weight of the Nasdaq-100 index and more than a fifth of the S&P 500.

However, for several of these stocks, their prominence has also resulted in rich valuations and share price gains that have outstripped profit growth, making them difficult for value-minded investors to swallow.

Fortunately, you can partake in the impressive business models of these mega-cap stocks without necessarily paying an exorbitant share price. The strategy is simple: Buy shares of businesses that provide products or services to these companies and thus benefit peripherally from the group's phenomenal growth. FAANG stocks and other giant tech firms drive outsized revenue and profit gains for their value-added resellers (VARs), software developers, component manufacturers, landlords and dozens of other business partners.

Here are seven better ways to make money off FAANG stocks. The names featured here are riding the coattails of their mega-cap partners to outsized top- and bottom-line growth. Better still, most are valued at cheaper price-to-earnings (P/E) multiples than the FAANGs they partner with, suggesting these names may still have room to run.

Data is as of Nov. 9.

• FAANG/Mega-cap relationship: Meta Platforms
• Market value: $8.5 billion

Zynga (ZNGA, $7.65) is an industry leader in mobile game development. The company initially built market share by partnering with Meta to launch mobile games like Zynga Poker, Words with Friends and Farmville that are multi-generational franchises.

It has since established download partnerships with FAANG stocks AAPL and GOOGL and, most recently, teamed up with social media firm Snap's (SNAP) Snapchat. The company's portfolio of gaming titles has been downloaded more than 4 billion times on mobile devices and reaches customers in over 175 countries.

In March, Zynga acquired cross-platform game developer Echtra Games, a move that should help extend its reach from mobile devices into PCs and consoles and expand its addressable market. And in August, the company bought Chartboost, a mobile advertising firm. Combining Chartboost's advertising and monetization platform that has an audience of roughly 700 million monthly users with Zynga's games should be a catalyst for revenue growth.

More good news for Zynga arrived in September when a California judge ruled that Apple cannot prevent game developers from bypassing its App Store and the 15%-30% commissions the tech giant charges on app purchases. This ruling enables gaming companies to reduce costs and retain a higher percentage of revenues.

In the third quarter, Zynga's bookings rose 6.4% year-over-year to $668 million and revenues surged 40.2% to $705 million. The company also reported $1.3 billion in cash and investments, up 76.8% from Q3 2020, which it says it will use to fund future acquisitions.

Over the last three years, Zynga has grown revenues 45% annually and has more than doubled normalized net income and levered free cash flow – the amount of cash a company has on hand after meeting its financial obligations – on an annual basis.

Wall Street analysts are bullish on ZNGA, too. Of the 19 following the stock that are tracked by S&P Global Market Intelligence, 13 say it's a Strong Buy, five call it a Buy and one rates it at Sell. Plus, the pros' consensus price target of $11.12 represents implied upside of 45.4% over the next 12 months or so.

• FAANG/Mega-cap relationship: Apple
• Market value: $187.7 billion

Qualcomm (QCOM, $166.74) has benefitted from its long – not always amicable – relationship with Apple and remains a key chip supplier for new iPhone models. Apple's 5G enabled iPhone 12 uses QCOM chips and teardowns of the recently launched iPhone 13 show it contains Qualcomm modems.

Apple is starting to design its own chips, but Qualcomm should continue to be at the forefront of the transition to 5G technology. According to QCOM, its Snapdragon processors offer the fastest 5G speeds available, with devices powered by these chips downloading content roughly 67% faster than the next largest competitor. Over 225 million 5G enabled smartphones shipped in 2020 and J.P. Morgan Research estimates this volume will more than double to 525 million this year and hit 725 million in 2022.

QCOM is further hedging its bets by making big investments in the Internet-of-Things (IoT) and in connected cars. During this year's September quarter, Qualcomm's IoT revenues rose 66% year-over-year to $1.5 billion. The global industrial IoT market was valued at $216 billion in 2020, according to market research firm Grand View Research, and is projected to grow 23% annually through 2028.

Qualcomm's product offerings for connected cars range from telematics to connectivity platforms and digital cockpits. Two years ago, less than 50% of new cars incorporated internet connectivity, but that percentage is expected to rise to 70% by 2025. QCOM's automotive revenues increased 44% during the September quarter to $270 million and reached $975 million for all of fiscal 2021.

Supporting this growth is the company's recent acquisition of Arriver whose driver assistance assets will be integrated into Qualcomm's own ADAS (advanced driver assistance systems) platform.

QCOM's revenues increased 43% year-over-year to $9.3 billion during the September quarter and adjusted earnings per share of $2.55 were up 76%. In its fiscal first quarter, the company is guiding for revenues of $10.0 billion to $10.8 billion and adjusted EPS to arrive between $2.90 and $3.10.

Of the 32 analysts covering the shares tracked by S&P Global Market Intelligence, 16 call it a Strong Buy, six say Buy and 10 have it at Hold. QCOM shares trade at a reasonable 15.8 times forward earnings – well below AAPL's forward P/E ratio of 27.

• FAANG/Mega-cap relationship: Netflix
• Market value: $63.0 billion

Roblox (RBLX, $109.52) develops on-line gaming platforms that offer users an immersive, virtual 3D experience. Last year's pandemic-induced lockdown fueled a surge in new players and was a major growth catalyst for the company. The number of daily active users on its platforms is up 31% from one year ago to 47.3 million. Although not yet profitable, revenues for RBLX more than doubled in the September quarter to $509.3 million and free cash flow rose 7% to $170.6 million.

The company is poised for even stronger growth in the second half of this year thanks to the recent launch of its 3D game that mimics "Squid Game" – Netflix's hugely popular new TV series. Since its mid-September release, the South Korean horror/drama about players in a deadly tournament of children's games has become Netflix's most-watched series to date, with interest already exceeding previous hits like "Stranger Things," which was also the theme of a sponsored Roblox event.

Netflix is not Roblox's only partner. The company teamed up with Sony Music Entertainment in July to build metaverse music experiences around Sony artists and create new revenue streams tied to virtual entertainment.

Analysts forecast 47% revenue growth for RBLX this year, followed by 20% annual growth over the next two years.

Of the 10 analysts following RBLX stock tracked by S&P Global Market Intelligence, four call it a Strong Buy, three say Buy, two believe it's a Hold and one deems it a Sell. CFRA Research analyst John Freeman is one of those with a Strong Buy rating on RBLX, calling the company's third-quarter results "outstanding" and projecting "even stronger preliminary numbers" for the start of the fourth quarter.

The stock surged more than 40% in the wake of its solid third-quarter earnings report, so this may be one to watch for an entry point on price weakness.

• FAANG/Mega-cap relationship: Amazon
• Market value: $109.8 billion

A simple and safe way to capitalize on Amazon's stellar growth is to own shares of its largest landlord, Prologis (PLD, $148.45). This preferred partner of most leading e-commerce and logistics businesses is also the world's largest warehouse real estate investment trust (REIT). Prologis owns roughly 4,700 properties totaling nearly 1 billion square feet of leasable space and has operations across 19 countries.

The FAANG member is PLD's largest tenant by far, accounting for roughly 22 million square feet of leasing space and 6.1% of net rents. Prologis' next largest tenants are Home Depot (HD, FedEx (FDX), UPS (UPS) and XPO Logistics (XPO). Together these four firms contribute 6.1% of annual rents.

The e-commerce tailwinds that help Prologis show no signs of slowing. During the pandemic, customers increasingly shopped online and that trend continues to build. According to market research firm eMarketer, online purchases in the U.S. are forecast to rise from approximately $709.8 billion – or 14.5% of all retail sales – currently to $1.0 trillion, or 18.1% of retail sales, in three years. And this trend could fuel demand for an additional 1.0 billion square feet of warehouse space by 2025, says global commercial real estate services firm JLL.

According to Prologis, every $1 billion increase in e-commerce sales creates demand for another 1.2 million square feet of warehouse space. Amazon alone added $49.4 billion to sales in the third quarter.

Prologis has consistently ranked among the best-performing REITs in the warehouse sector. On an annual basis, core FFO (funds from operations, a key REIT earnings metric) per share has risen 10% and dividends have risen 9% over the past five years.

During the September quarter, Prologis CEO Hamid R. Moghadam said vacancies were at unprecedented lows and that "space in our markets is effectively sold out." The REIT is guiding for roughly 7% core FFO per share growth in 2021, supported by an industry-leading balance sheet and a land portfolio with an estimated $21 billion buildout potential.

Barclays analyst Anthony Powell initiated coverage of PLD with an Overweight (Buy) rating in September, saying industrial is his favorite REIT subsector. CFRA Research analyst Stewart Glickman recently said "fundamentals point to an enviable supply-demand situation heading into 2022," but lowered his rating from Strong Buy to Hold recently due to price gains on PLD stock that have outpaced its REIT peers so far this year.

• FAANG/Mega-cap relationship: Alphabet (Google)
• Market value: $72.8 billion

Workday (WDAY, $293.48) hit the ground running ahead of its October 2012 initial public offering (IPO) by signing search giant Google as one of its first customers. Google replaced parts of its internally developed human resources (HR) software with Workday software. Since then, WDAY has become the industry leader in cloud-based software that helps companies manage finance, HR and strategic planning functions.

Workday has grown to more than 55 million users worldwide and claims over 50% of Fortune 500 companies as customers.

The company delivered a stellar June quarter with revenues up nearly 19% year-over-year to $1.26 billion, fueled by a 20% rise in subscription revenues. Workday's adjusted EPS came in at $1.23, more than 46% higher than the year prior, and the company raised its full-year guidance for subscription revenues and operating margins.

Workday's new strategic partnership with Google Cloud is expected to spur growth for both companies by enabling customers to deploy Workday finance, HR and strategic planning software on Google Cloud. The multi-year partnership also includes co-marketing and cross-selling programs to increase new business opportunities across the U.S. In addition, the two companies plan to explore opportunities to co-develop cloud-based applications for customers in the retail, healthcare and financial services industries.

Google subscribed to additional products in September – Workday Adaptive Planning, Workday Extend, Workday Prism Analytics and Workday Strategic Sourcing – and expanded its use of WDAY human resources tools by adding new applications.

Barclays analyst Raimo Lenschow upgraded WDAY shares to Overweight in August based on his expectations of increased IT spending in the second half of 2021. Most analysts are bullish on Workday. Of the 34 covering the stock tracked by S&P Global Market Intelligence, 19 say it's a Strong Buy, 9 believe it's a Buy, five deem it Hold and one calls it a Sell.

Plus, the company is forecast to grow EPS 26% annually over the next three-to-five years, or nearly twice the anticipated growth rate of the overall IT sector.

• FAANG/Mega-cap relationship: Microsoft
• Market value: $8.5 billion

Arrow Electronics (ARW, $119.98) built its business supplying semiconductors to original equipment and contract manufacturers. The company has been a Microsoft partner for over a decade, providing electronics and services that are directly integrated into MSFT portals for service provisioning and configuration. In 2019, Microsoft named the company its Indirect Provider of the Year.

More recently the company began offering enterprise computing software for data center, cloud, security and analytics services. Already a Microsoft Cloud Service Provider, Arrow is partnering with MSFT to deploy tools on its Azure platform that speed development of IoT solutions. By participating in the IoT space, Arrow benefits from an expected surge in global IoT spending.

Earlier this year, Arrow expanded its relationship with one of the original FAANG stocks: Amazon.com. Per its agreement with Amazon Web Services (AWS), Arrow will be able to resell, manage, service, support and bill AWS accounts on behalf of their customers. Arrow is also working with AWS to support OEM customers that are building smart devices incorporating the cloud technology.

Thanks to its massive scale, Arrow was able to secure semiconductor inventories in 2021 that many competitors could not. As a result, the company's September quarter sales improved 18% year-over-year and EPS rose 94%. Analysts think Arrow will improve on its impressive EPS growth rate by delivering 17% annual EPS gains over the next three to five years.

ARW shares are cheap, too, trading at 6.8 times forward earnings. For the sake of comparison, Microsoft's forward P/E ratio is 36.8 and Amazon's is 55.9.

• FAANG/Mega-cap relationship: Tesla
• Market value: $603.1 million

Modine Manufacturing (MOD, $11.63) designs, manufactures and sells heat transfer products used by customers in the HVAC systems, commercial and industrial, heavy-duty equipment and automotive markets.

The company has long been a key supplier of battery chilling technologies to Tesla, the world's largest manufacturer of electric vehicles (EVs). In the first nine months of 2021, TSLA produced nearly 625,000 vehicles – up almost 88% from the year prior.

Demand for electric vehicles is forecast to rise nearly 22% annually to 233.9 million units by 2027 – valuing the market at nearly $2.5 trillion by 2027 – according to market research firm Meticulous Research. Wisconsin-based Modine's established relationship with Tesla could become a major growth catalyst, particularly if worsening trade relationships with China cause Tesla to shift more of its business to reliable U.S. suppliers.

Modine recently sold its traditional automotive business and plans to focus more resources on computer data center cooling products, industrial HVAC and electric vehicles. Expanding in more profitable niches will enable Modine to increase operating margins and free cash flow and to accelerate repayment of debt.

In September, Modine said it is creating a separate business unit focused exclusively on cooling technologies for electric vehicles. The company is in discussions with 30 customers, has commenced production on three programs and won five additional contracts that will launch over the next 12 months.

Modine achieved double-digit sales growth in three out of four of its business units during the September quarter, though total year-over-year revenue growth came to a more modest 4% amid supply chain issues, a global semiconductor shortage and a loss associated with the sale of its air-cooled automotive segment.

Modine has Strong Buy ratings from both of the Wall Street analysts tracking the stock. It also looks bargain-priced at 7.5 times forward earnings – especially when compared to TSLA's forward P/E ratio of 26.7.

Forget the Dow. Forget the S&P 500. If you're looking for the major index with the most pep in its performance step, look to the Nasdaq-100 – and the growing number of Nasdaq-100 ETFs and mutual funds that allow you to enjoy its fortunes.

The Dow Jones Industrial Average was for decades America's premier stock index, the favored proxy of domestic industry.

Over time, the Dow was eclipsed by the S&P 500 Index. By virtue of tracking 500 companies versus the 30 Dow Jones stocks, the S&P could cover a wider array of firms and better represent the spectrum of U.S. business.

But, from a pure return perspective, both suffer in comparison to the tech-heavy Nasdaq-100 Index. The Nasdaq-100, introduced in 1985, is a select slice of the larger Nasdaq Composite's largest nonfinancial companies.

The index has long been dominated by the best tech stocks, with technology currently accounting for roughly 60% of its total weight.

But it also includes sizeable slugs of high-growth consumer discretionary plays, communication services stocks, and significant health care and industrials exposure too.

The Nasdaq-100 has been a monster outperformer over the long run, delivering a 464% total return (price change plus dividends) during the past decade, easily outdoing the Dow (+213%), S&P 500 (+265%) and the Nasdaq Composite (357%).

The folks over at investment management company Invesco are surely loving it. They sponsor the Invesco QQQ Trust (QQQ), which has allowed investors to take advantage of those rapid gains for decades.

The popularity of QQQ has spawned several related equal-weight, inverse and leveraged products over the years.

More recently, Invesco has leveraged QQQ's success into a number of related investment products tied to the fund (more on those in a moment).

Read on as we examine 14 of the best Nasdaq-100 ETFs and mutual funds. A few of these funds are direct plays on the index itself, while the rest offer various ways to slice, dice and even amplify the Nasdaq-100.

Data is as of July 29.

• Assets under management: $362.4 billion
• Expenses: 0.20%, or $20 annually for every $10,000 invested

Ultimately, the Nasdaq-100 Index is just a set of data. The Invesco QQQ Trust (QQQ) turned that dataset into shareholder returns.

QQQ came to life in March 1999 – unfortunate timing for its first few years, given the dot-com bubble burst shortly thereafter. But, given its total return, long-term investors aren't exactly complaining.

Between 2010 and 2013, QQQ assets had grown from $22 billion to $38 billion. Today, it's more than $360 billion under management, and QQQ has become ubiquitous. You can find it in limited-selection beginner investment apps and robo advisers, and even its options contracts are popular.

As for its innards, the QQQ ETF is a simple index fund that tracks the Nasdaq-100. Top holdings include artificial intelligence juggernaut Nvidia (NVDA) as well as familiar tech names such as Apple (AAPL) and Microsoft (MSFT).

The portfolio also includes consumer giant Amazon.com (AMZN), upstart semiconductor company Broadcom (AVGO), electric vehicle (EV) maker Tesla (TSLA) and social media conglomerate Meta Platforms (META).

It's not quite accurate to call the Nasdaq-100 a broad index because there are so many areas of the market that are quiet or downright missing in QQQ. But it's not a wholesale tech ETF, either.

It is what it is, mostly for better than for worse.

Learn more about QQQ at the Invesco provider site.

• Assets under management: $1.3 billion
• Expenses: 0.35%

Invesco might be the most well-known fund to leverage the Nasdaq-100, but Direxion offers an interesting take on the index, too.

The Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE) invests in an equal-weighted version of the Nasdaq-100. Every March, June, September and December, the index is rebalanced, resetting each of its 100 stocks at 1% of assets.

Their weight will fluctuate depending on how they perform over the next three months, but once the next rebalancing occurs, they're all set back onto equal footing.

That means "bottom" Nasdaq-100 holdings like Micron Technology (MU) and Automatic Data Processing (ADP) have just as much sway as the Apples and Microsofts – and, now, the Nvidias – of the world.

The good news? There's far less single-stock risk. Consider that, with QQQ, three stocks each account for more than 7% of its performance, and there are a few more with healthy single-digit weights.

A bad stretch for any one of those stocks could cancel out the progress of several smaller-weighted constituents, thus dragging on the ETF's returns. Equal-weighting blunts this downside risk.

The bad news? Over the long term, it doesn't allow its winners to ride.

The reason the likes of Apple, Microsoft and Nvidia are overwhelming factors in the major indexes (which tend to be weighted by market capitalization) is simply because they've grown so much. This allows these indexes to increasingly benefit in their upside.

Ultimately, the choice between QQQE and QQQ comes down to what you're comfortable with from a risk perspective.

Learn more about QQQE at the Direxion provider site.

• Assets under management: $56.1 billion
• Expenses: 0.15%

While QQQ is wildly popular, it does have one small shortcoming: Compared to many other broad-market and sector index funds, its annual fees are a touch on the high side.

However, Invesco took care of that in October 2020 by launching the Invesco Nasdaq 100 ETF (QQQM). It's simply a cheaper version of QQQ. At 0.15% annually, it costs five basis points fewer than its sister fund. (A basis point = 0.01%.)

So . . . why not just make QQQ cheaper? The QQQ ETF is an extremely liquid fund that changes hands at a rate of more than 40 million shares daily. As a result, it's able to create tight bid-ask spreads.

That's ideal for traders, who aren't as concerned about low expense ratios as longer-term investors. Rather than drop the fee on QQQ, Invesco created QQQM for buy-and-hold investors who are focused on cost savings.

Invesco can't complain. In fewer than three years, QQQM soaked up more than $56 billion in assets – without kneecapping the QQQ, which continues to expand apace.

As for investors, if you want to buy the Nasdaq-100 Index and hold it, your most significant cost savings will be from the five-basis-point discount in QQQM.

Traders, however, will benefit more from entering and exiting trades with pinpoint precision, which the QQQ's trading volume offers.

Learn more about QQQM at the Invesco provider site.

• Assets under management: $7.7 billion
• Expenses: 0.42%

Before we discuss a few other Nasdaq-100 ETFs, we should point out that the index can support more than just exchange-traded funds.

It might sound funny to call a $7.7 billion mutual fund a "hidden gem." But it's not far from the truth with Victory Nasdaq-100 Index Fund (USNQX).

USNQX, which launched in October 2000, is almost as old as QQQ. But it boasts a small fraction of the ETF's assets.

And it's not for lack of performance: USNQX ranks in the top 10% of funds in its category (large growth) for every meaningful long-term time frame.

The 0.42% expense ratio is more than you'd pay for the Invesco QQQ Trust (and it's much higher than ETFs on average, for that matter).

But it's roughly half the Morningstar category average expense of 0.785%, so USNQX is at least relatively cheap. And it should be, given that this is an index fund.

As you might expect, Victory Nasdaq-100 Index Fund's holdings and breakdown are virtually identical to QQQ. They both just track the index.

Learn more about USNQX at the Victory Capital provider site.

• Assets under management: $74.3 million
• Expenses: 0.20%

The Invesco ESG Nasdaq 100 ETF (QQMG, $38.98) is another of the funds Invesco created to capitalize on QQQ's popularity. Its October 2021 launch also dovetailed with the rising popularity of environmental, social and governance (ESG) investing.

As the name suggests, this ETF invests in Nasdaq-100 stocks that also meet certain ESG criteria. Among the requirements for inclusion:

• meet an ESG Risk Rating Score threshold;
• be deemed compliant with U.N. Global Compact principles;
• meet business controversy-level requirements; and
• not be involved in certain business activities, including alcohol, cannabis, controversial weapons, gambling, military weapons, nuclear power, oil & gas and tobacco.

The ESG filters keep out fewer than 10% of QQQ's holdings – mostly energy stocks but also industrial heavyweight Honeywell (HON).

From a sector perspective, you lose a little exposure to several sectors. The portfolio is concentrated in tech, which represents 62.5% of assets vs 53.3% in QQQ.

It's not a massive difference. But if you're looking for a slightly greener version of QQQ without any oil and gas exposure, QQMG does the trick.

Learn more about QQMG at the Direxion provider site.

• Assets under management: $173.8 million
• Expenses: 0.29%

The Invesco Nasdaq 100 Index Fund (IVNQX), which was launched alongside QQQM, allows investors to track the Nasdaq-100 Index with a mutual fund.

This fund, which will provide similar coverage as QQQ and QQQM, was created to allow Invesco to reach a broader audience. Specifically, it's aimed at retirement accounts, which often can't access ETFs.

Indeed, IVNQX represents Class R6 shares, which are primarily intended for retirement plans, shareholders of omnibus intermediaries that meet certain standards, and institutional investors. In short, it's unlikely you'll be able to access IVNQX with a traditional brokerage account.

Fortunately, your traditional brokerage account will have access to QQQ and QQQM, so it's not an issue.

Learn more about IVNQX at the Invesco provider site.

Call 'em sequels, call 'em spinoffs: The next three funds aren't traditional Nasdaq-100 ETFs. But they're closely related, and they've picked up significant followings of their own. The expense ratios for the following funds range from 0.15% to 0.20%.

First to market, in October 2020, was the Invesco Nasdaq Next Gen 100 ETF (QQQJ). Think of this as the Nasdaq-100's junior varsity squad. While QQQ ETF tracks the 100 largest Nasdaq non-financials, QQQJ tracks the next 100 largest stocks, hence the name.

QQQJ is similar to QQQ in some ways but different in others. For instance, like its older sister fund, QQQJ is heavy in tech, which is the top sector allocation at 39%.

What has set it apart from inception is a much larger position in health care (20.6% to QQQ's 4.8%) and industrials (10.2% to QQQ's 3.5%).

Since inception, the Next Gen's index has traded similarly to the Nasdaq-100 but with periods of clear outperformance and underperformance.

In October 2021, Invesco launched the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG), an ESG-screened version of QQQJ.

The ESG screening doesn't have much of an impact at present, eliminating just a few holdings.

Then, in October 2022, Invesco introduced the Invesco NASDAQ Future Gen 200 ETF (QQQS) – and no, it's not the next 100 stocks up after the Next Gen ETF.

QQQS tracks the Nasdaq Innovators Completion Cap Index, which is made up of 200 small-cap stocks "with the most valuable patent portfolios relative to their total market value as deemed by Nasdaq," according to the fund site.

The index selects its holdings from the Nasdaq Composite, but those holdings can't be Nasdaq-100 or Nasdaq Next Generation 100 stocks.

Learn more about these ETFs at Invesco: QQQJ | QQJG | QQQS

• Expenses: 0.95%

This last group of ETFs is not for the faint of heart. More specifically, these funds are not designed for buy-and-hold investors. Except for ProShares UltraPro QQQ (TQQQ, which has an expense ratio of 0.84%, the expense ratio for these funds is 0.95%.

ProShares offers several ETFs that provide leveraged, as well as inverse, exposure to the Nasdaq-100 Index.

"Leveraged" exposure typically means the fund produces multiple times the performance of an index on a daily basis.

With the ProShares Ultra QQQ (QLD), you're getting two times – or two-times – the daily performance of the Nasdaq-100. That gives you the opportunity to double your gains . . . but also to double your losses. The ProShares UltraPro QQQ provides three-times positive exposure.

"Inverse" exposure means you're getting the inverse of an index's performance. Let's say the Nasdaq-100 Index goes down 1% tomorrow; the ProShares Short QQQ (PSQ) should gain 1% (minus expenses, of course).

You can combine the two ideas – leveraged and inverse exposure – via the ProShares UltraShort QQQ (QID), a negative two-times fund, and the ProShares UltraPro Short QQQ (SQQQ), a negative three-times fund.

We've previously noted that the ProShares Short S&P500 ETF (SH) provides inverse, or negative 1x, exposure to the S&P 500 and is a fairly safe and straightforward hedge against the market. That makes it one of the best bear market ETFs to buy.

The same goes with PSQ, which also offers negative 1x exposure to the Nasdaq-100. If the market heads higher, these products naturally will lose value – but not at an accelerated rate like their leveraged brethren.

However, two-times and three-times products are best left to day traders and the pros. A wrong bet on these products can compound in a hurry.

They're generally too heavy on risk for most individual investors.

Learn more about these inverse ETFs at ProShares: QLD | TQQQ | PSQ | QID | SQQQ

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What sector has driven much of the U.S. stock market's gains in the past decade and now accounts for about 32% of the S&P 500 and 61% of the Nasdaq-100? If you guessed technology, you're right.

While past eras of American growth were shaped by industries such as oil in the 1970s, manufacturing in the 1980s and finance in the 1990s, the 2000s, following the dot-com bust and the 2008 financial crisis, have been defined by the resurgence and dominance of tech.

Investor interest has shifted from one theme to the next: cybersecurity, cloud computing, robotics, semiconductors and more. Some, such as the metaverse, proved fleeting. Others, including artificial intelligence (AI), continue to fuel massive research budgets and capital expenditures, reshaping not just markets but global competition.

Tech ETFs offer one of the simplest and most efficient ways to gain exposure to these trends, so long as you understand how they're constructed and perform.

How to pick the right tech ETF

If the 32% and 61% weightings of tech stocks in the S&P 500 and Nasdaq-100 aren't enough for your goals, you can use a narrower technology ETF to increase your exposure.

But doing so means stepping into the world of active investing. Narrower ETFs require more attention, longer due diligence and a better understanding of what you're actually buying than a simple, broad-market index fund.

That's why it's important to match the specificity of the ETF to your investment objective. One helpful way to think about the tech ETF universe is in three tiers: sector-level, industry-level and thematic.

At the sector level, technology is one of the 11 sectors defined by the Global Industry Classification Standard (GICS), a widely adopted taxonomy used by major index providers such as S&P Dow Jones and MSCI.

Most broad tech ETFs follow this standard, and it generally includes what Wall Street analysts refer to as "tech": enterprise software firms, semiconductors, IT service providers and so on.

However, GICS doesn't always align with investor expectations. Some of the most well-known companies often thought of as tech — namely, Netflix (NFLX), Alphabet (GOOGL) and Meta Platforms (META) — aren't classified under the tech sector at all.

Instead, they're tagged as communication services stocks and lumped together with traditional telecoms such as Verizon Communications (VZ) and AT&T (T).

Meanwhile, Tesla (TSLA) and Amazon.com (AMZN), despite their deep involvement in automation and cloud computing, respectively, are categorized as consumer discretionary stocks. On the surface, Tesla sells cars, and Amazon runs an e-commerce platform, but their business models include clear technology-driven components, such as autonomous vehicle software and cloud computing.

If an ETF markets itself as "tech sector," check whether it follows GICS classifications. You might be surprised by which names are excluded.

If you're particularly bullish on one area of tech but more neutral on others, an industry-specific ETF can offer more targeted exposure than a broad sector fund. GICS divides the tech sector into five primary industry groups:

• IT services
• Software
• Communications equipment
• Technology hardware, storage & peripherals
• Electronic equipment, instruments & components

Drilling down on individual stocks, International Business Machines (IBM) sits under IT services, focusing on enterprise solutions and cloud infrastructure. Salesforce (CRM) and Oracle (ORCL) are software names offering cloud-based applications and databases.

In the equipment category, you'll find semiconductor stocks including Nvidia (NVDA) and Texas Instruments (TXN), as well as networking hardware producers such as Cisco Systems (CSCO).

Keep in mind that the narrower the ETF, the more likely it is to be concentrated in a handful of large names, so you'll need to weigh the benefits of focus against the risks of reduced diversification. This can be an issue in industries in which one standout such as Nvidia outperforms the others.

Lastly, there's the thematic approach. These ETFs aren't bound to GICS classifications and instead follow customized benchmarks designed to track specific trends. This flexibility is especially useful today, when companies increasingly operate across traditional sector lines. For example, a thematic AI-focused ETF might include:

• Semiconductor firms such as Nvidia that supply the processing power
• Data center REITs that provide the storage backbone
• Software developers building large language models

Whether you choose a sector-based, industry-specific or thematic ETF, it's always a good idea to check the index it tracks. Review the index's inclusion rules and definitions. That way, you won't be caught off guard when your "tech" ETF doesn't include a company you assumed would be there.

How we picked the best tech ETFs

We started by filtering for ETFs with expense ratios no higher than 0.45%. That's more than you'd typically pay for a broad-market index fund, but it’s reasonable given the added specificity that tech-focused funds provide.

Even within the technology category, costs tend to rise as you move from sector-level to industry-specific to thematic strategies, so a little premium is expected, but we avoided funds that charged too much for that focus.

We also required a minimum $1 billion in assets under management (AUM). At this level, the risk of ETF closure is very low. Larger funds also tend to be more resilient in bear markets and better equipped to handle large inflows and outflows without disrupting performance.

Liquidity was another important screen. While many investors might hold tech ETFs as part of a long-term sector overweight, others use them for tactical trading — for example, during earnings season.

With that in mind, we only included exchange-traded funds with a 30-day median bid-ask spread of 0.10% or less, helping ensure tight execution for both buy-and-hold and active traders.

Finally, we stuck to ETFs that track an index. Passive products not only have lower fees but also offer full transparency. With an index ETF, you can easily visit the provider's site, download the methodology and understand how the fund is constructed.

That's not always the case with active ETFs, which rely heavily on a manager's discretion or a proprietary model, turning the strategy into more of a black box. For most investors, index-based ETFs offer clarity and consistency that's easier to evaluate and build around.

• Assets under management: $83.8 billion
• Expense ratio: 0.08%
• 30-day median bid-ask spread: 0.01%
• 10-year annualized total return: 22.4%

The Technology Select Sector SPDR Fund (XLK) is part of SPDR's suite of 11 Select Sector ETFs, each tied to one of the GICS sectors within the S&P 500 universe. As the tech-sector option, XLK holds 70 large-cap U.S. tech stocks, but nearly 40% of its weight is concentrated in just three names: Microsoft (MSFT), Apple (AAPL) and Nvidia.

This ETF adheres strictly to GICS sector definitions, meaning popular companies such as Tesla, Amazon, Alphabet, Meta and Netflix are excluded. Investors wanting broader "tech-adjacent" exposure will need to complement XLK with ETFs from the consumer discretionary and communication services sectors.

Thanks to its size and long history, XLK is extremely liquid, widely traded and has listed options available. Its expense ratio has come down over time, and its dividend yield is just 0.7%, making it tax-efficient but driven largely by capital appreciation.

Learn more about XLK at the State Street Investment Management provider site.

• Assets under management: $126.5 billion
• Expense ratio: 0.09%
• 30-day median bid-ask spread: 0.04%
• 10-year annualized total return: 23.0%

While ETFs such as XLK are limited to S&P 500 constituents and therefore include mostly large-cap stocks, the Vanguard Information Technology ETF (VGT) offers broader exposure to the entire U.S. tech sector, encompassing mid- and small-cap names, with 318 total holdings.

That said, VGT is still market cap-weighted, so its top three holdings of Nvidia, Apple and Microsoft remain the dominant positions.

Vanguard has gradually lowered the ETF's expense ratio to 0.09%, making it cost-effective, though it's still a shade more expensive than XLK.

It's also less popular with short-term traders due to a thinner options chain with fewer expiration dates and strike price choices.

Learn more about VGT at the Vanguard provider site.

• Assets under management: $7.6 billion
• Expense ratio: 0.39%
• 30-day median bid-ask spread: 0.02%
• 10-year annualized total return: 22.1%

The iShares Expanded Tech Sector ETF (IGM) helps address a common limitation of sector-pure ETFs like XLK and VGT by tracking the S&P North American Expanded Technology Sector Index.

This benchmark broadens the definition of tech to include key communication services names such as Meta Platforms, Alphabet and Netflix.

However, IGM still falls short of full tech exposure, as it excludes major tech-driven companies classified under consumer discretionary, including Amazon and Tesla. It does offer a small dose of international diversification through select Canadian firms such as Shopify (SHOP).

Performance and tax efficiency have been strong, but IGM's 0.39% expense ratio may give cost-conscious investors pause.

Learn more about IGM at the iShares provider site.

• Assets under management: $6.1 billion
• Expense ratio: 0.39%
• 30-day median bid-ask spread: 0.08%
• 10-year annualized total return: 21.5%

The iShares Global Tech ETF (IXN) takes international diversification seriously, going far beyond IGM's token non-U.S. exposure. It tracks the S&P Global 1200 Information Technology 4.5/22.5/45 Capped Index, providing a portfolio of 127 holdings across developed and emerging markets.

The ETF is still market cap-weighted, so U.S. tech giants Nvidia, Microsoft and Apple remain dominant, but you also get meaningful exposure to global standouts. Notably, IXN includes Taiwan Semiconductor Manufacturing (TSM), the world's leading chip foundry; ASML Holding (ASML), a key supplier of lithography equipment; SAP (SAP), Europe's top enterprise software provider; and Samsung Electronics, a major player in semiconductors, smartphones and displays.

That global reach comes at a cost. IXN charges a relatively high 0.39% expense ratio and has a wider 0.08% spread, making it more expensive to hold or trade compared with more liquid U.S.-focused options.

Learn more about IXN at the iShares provider site.

• Assets under management: $40.7 billion
• Expense ratio: 0.35%
• 30-day median bid-ask spread: 0.01%
• 10-year annualized total return: 33.3%

Not all tech industries have delivered equally strong returns, but semiconductors have consistently outperformed, fueled by AI-related demand for GPUs, high-performance computing and data center infrastructure. The VanEck Semiconductor ETF (SMH) has been one of the biggest beneficiaries of that trend.

The ETF offers exposure to megacap chipmakers Nvidia, Broadcom (AVGO) and Advanced Micro Devices (AMD), as well as equipment suppliers such as ASML and Applied Materials (AMAT), and foundries including Taiwan Semiconductor Manufacturing.

It's the largest semiconductor-focused ETF on the market and one of the most actively traded. However, the fund is heavily concentrated. Nvidia currently accounts for nearly 20% of the portfolio, with TSM at 11.5%.

For investors concerned about single-stock risk, other ETFs in the category offer similar 0.35% expense ratios with capped or equal-weight exposure.

Learn more about SMH at the VanEck provider site.

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Semiconductors are synonymous with Silicon Valley. Chip makers started popping up at the southern end of San Francisco Bay as early as the 1950s. A big draw back then as now: Stanford University and its bevy of researchers and research facilities. Today, seven of the biggest publicly traded semiconductor companies still call Silicon Valley home, with headquarters in such tech-friendly California cities as Santa Clara and San Jose.

Despite the steady decline in computer sales in recent years -- semiconductors are the brains inside PCs -- all seven of these chip stocks have performed well during the current long-running bull market. In fact, six of the seven have handily outpaced the 348% total return (including dividends) of Standard & Poor’s 500-stock index since March 9, 2009. The seventh isn't far behind.

But some Silicon Valley chip stocks have performed significantly better than others over the past eight-and-a-half years. Four of the seven have even beaten the remarkable 530% total return of the Nasdaq-100 Index, which is made up of the largest non-financial stocks listed on the Nasdaq Stock Market by market capitalization. Check out Silicon Valley's best semiconductor stocks of the bull market.

Return data provided by S&P Global Market Intelligence. Prices and returns as of Oct. 13, 2017. Due to the multiple share classes issued by some companies, the Nasdaq-100 Index currently consists of 107 stocks. Market capitalization represents share price multiplied by the number of shares outstanding. The seven stocks on this list, which represent the seven semiconductor companies included in the Nasdaq-100 that are headquartered in Silicon Valley, are listed in order of total returns during the current bull market, from lowest percentage return to highest.

• Ticker symbol: INTC
• Share price: $39.67
• Bull market return: 317%
• Dividend yield: 2.8%
• Headquarters: Santa Clara, Calif.

Intel is the old-timer of Silicon Valley. The company was founded in 1968 and held its initial public offering in 1971. But Intel’s longevity is a big reason it’s one of the greatest tech stocks of all time. Through the end of 2016, the stock has generated a staggering $259 billion in lifetime wealth for its shareholders, according to stock research conducted by Hendrik Bessembinder, a finance professor at Arizona State University. Returns have been leaner during the current bull market as declining demand for PCs has hurt demand for Intel’s semiconductors. That has forced Intel, the world's largest maker of the central processing units that serve as a PC's brain, to find new ways to generate revenue growth. The expansion of cloud-based services has been a boon, thanks to its dominance of the market for server chips. Analysts at Credit Suisse think Intel is well-positioned for the long term because of its scale and investments in research and development.

• Ticker symbol: XLNX
• Share price: $72.81
• Bull market return: 421%
• Dividend yield: 1.9%
• Headquarters: San Jose, Calif.

Founded in 1984, Xilinx is another longtime denizen of Silicon Valley in the chip business that hasn't pulled its weight through the current bull market. Shares trail the Nasdaq-100 Index by 109 percentage points even after accounting for dividends. A change in the landscape promises better times ahead for the maker of programmable chip technology. Although Xilinx faces tough competition from Intel, investors are excited about the payoff from selling chips to Amazon.com’s (AMZN) thriving cloud-computing business, Amazon Web Services. And the boom in data centers beyond Amazon offers additional avenues of growth.

• Ticker symbol: MXIM
• Share price: $48.42
• Bull market return: 489%
• Dividend yield: 3.1%
• Headquarters: San Jose, Calif.

It's been steady as she goes for Maxim Integrated Products' stock for much of the bull market, thanks in part to the inexorable rise of digital mobile devices. Among other areas of operation, the company, founded in 1983, supplies chips to smartphone giants Apple and Samsung. That leaves it exposed to risk if either of those partners were to have a change of plans. But Stifel analysts say the company's ongoing diversification efforts give it multiple opportunities for growth without becoming too dependent on a single customer. So while it’s hard to imagine consumers abandoning their iPhone and Galaxy smartphones in droves, Maxim should be safe if they do since it depends on neither Apple nor Samsung for more than 10% of its overall business.

• Ticker symbol: AMAT
• Share price: $53.94
• Bull market return: 654%
• Dividend yield: 0.7%
• Headquarters: Santa Clara, Calif.

Wall Street is increasingly bullish on Applied Materials. Of the 14 analysts covering the stock tracked by Zacks, 10 call it a "Strong Buy," two have it a "Buy," and two have it "Hold." There are no “Sell” ratings. It's easy to see where the optimism comes from. Applied Materials' core business of semiconductor equipment and services benefits from today's trends. The rise of artificial intelligence, cloud computing, the Internet of Things, mobile devices and Big Data are driving increased demand for chips. As a supplier to the companies that make the chips powering all these technologies, Applied Materials finds itself in an enviable position. The company also supplies products for making displays for TVs, tablets, computers and smartphones. And don’t be fooled into thinking of Applied Materials as a relative newcomer to Silicon Valley. It was founded in Mountain View, Calif., in 1967 – a year before Intel.

• Ticker symbol: LRCX
• Share price: $189.90
• Bull market return: 938%
• Dividend yield: 1.0%
• Headquarters: Fremont, Calif.

Shares of Lam Research have seen some ups and down along the way, but the bottom line is that this supplier of equipment to chip makers delivered outsized total stock returns since the bull market began. Analysts at Zacks Equity Research note that the company continued its impressive earnings momentum with another better-than-expected profit beat in its most recent quarter. Furthermore, analysts are raising their profit estimates. Of the 13 analysts covering the stock polled by Zacks, 9 have Lam at "Strong Buy," two call it a "Buy" and two rate it at "Hold." Lam got its start in Santa Clara in 1980, making it one of the early players in the lucrative Silicon Valley semiconductor industry.

• Ticker symbol: KLAC
• Share price: $105.30
• Bull market return: 970%
• Dividend yield: 2.3%
• Headquarters: Milpitas, Calif.

The KLA-Tencor we know today came into being in 1997 from the merger of KLA Instruments and Tencor Instruments. But its experience in the semiconductor industry stretches back to the 1970s, when its predecessor companies got their respective starts. Experience has paid off. KLA-Tencor shares have delivered impressive price appreciation over the last eight-plus years of the bull market, but what really sets this Silicon Valley stock apart is an unusually generous dividend. The technology sector as a whole pays an average dividend of just 1.4%, according to Dividend.com. Suppliers of equipment to the semiconductor industry, which is what KLA-Tencor does, are even more stingy. The company's competition coughs up an average dividend yield of less than 1%. In August, KLA-Tencor hiked its quarterly dividend to 59 cents a share from 54 cents, a 9.3% increase.

• Ticker symbol: NVDA
• Share price: $194.59
• Bull market return: 2,426%
• Dividend yield: 0.3%
• Headquarters: Santa Clara, Calif.

Much like the Backstreet Boys and NSYNC, Nvidia was a unique product of the 1990s. Founded in 1993 and public since 1999, the company blossomed as computers and gaming consoles became more popular and more complex. In its early days Nvidia was primarily known in the gaming community for making high-end video graphics cards. It turns out that graphical processing units (GPUs) have a wide range of applications in today's data-rich world. From the automotive industry to mining for Bitcoins, Nvidia has customers across the business and consumer landscapes. The next big area of growth is expected to be artificial intelligence, which industry observers call the "killer app" for its chips. Analysts expect the company's sales to increase 30% this year, according to Thomson Reuters, while earnings per share should gain 40%. Bull market or not, it's reasonable to question whether shares in Nvidia can keep up such a torrid pace. After all, they've returned well over 2,000% in the past eight and a half years. But for now, at least, Nvidia is holding up its end of the bargain thanks to the impressive top- and bottom-line growth.

It’s a good time to invest in technology stocks. With the U.S. economy picking up steam and other developed countries holding their ground, tech companies should be able to deliver solid growth in the coming years. As a result, “the returns to investors could be quite, quite high,” says Walter Price, a co-manager of Wells Fargo Advantage Specialized Tech Fund.

Moreover, we’re still not halfway through a four-month stretch that historically has been a good period for owning tech stocks. In six of the past seven years, the Nasdaq 100 Technology index has outpaced Standard & Poor’s 500-stock index from November through February. Dan Wiener recently wrote about this—he calls it the “Tech Winter”—in his newsletter, The Independent Adviser for Vanguard Investors. During this period, Wiener says, “well-chosen tech stocks traditionally post some of their best market-beating numbers.” Much of that is driven by a year-end “use-it-or-lose-it” mindset at big technology buyers. And ahead of new-product launches, tech companies typically offer discounts on older products at this time of year, and that spurs more buying.

The operative words, though, are “well-chosen tech stocks.” That’s where smart, experienced mutual fund managers come into play. Below, we name our five favorite no-load tech funds. (Returns are through December 18.)

Though they come from the same fund company, Fidelity Select Electronics Portfolio (FSELX) and Fidelity Select IT Services Portfolio (FBSOX) differ dramatically. Select Electronics, which Steve Barwikowski has run since 2009, focuses on the semiconductor industry and the end markets it serves, including computer companies and cell-phone makers. The fund holds many of the industry’s major players, including Korea’s Samsung Electronics (the world’s second-largest semiconductor company) and Intel (the computer-chip juggernaut).

The subsector’s boom-and-bust cycles are shorter and less severe than they once were, says Barwikowski. But he still spends a lot of time figuring out where we are in that cycle and then picking stocks for the portfolio accordingly. Barwikowski is at heart a value investor, so if the semiconductor cycle is hitting bottom (an abundant supply of chips and low demand for such products), then he’ll likely buy stock in small companies on the cheap. At the peak of the cycle, when chip demand is high, he’s more likely to buy shares in large, dividend-paying companies with steady profits. Currently, Barwikowski says, it’s “Goldilocks time: It’s not too hot and it’s not too cold.” Demand is good, and inventories are lean but not too lean.

At last word, the fund had about 80% of its assets in semiconductor makers, distributors and chip-equipment makers. About 10% was in electronic equipment makers, such as Audience Inc., which makes products that improve voice quality in mobile devices. The rest of the assets are split among Internet firms, including Amazon.com and Google, as well as software and computer hardware businesses. The fund holds 68 stocks.

This fund has been a touch more volatile than the typical tech fund over the past five years. But since Barwikowski stepped in as manager, it returned 25.4% annualized, outpacing the typical tech fund by an average of 4.6 percentage points per year.

Select IT Services holds what manager Kyle Weaver calls “stodgy and unsexy” companies. That’s because, he says, he focuses on “businesses that help other businesses use technology to solve their problems.” It’s a wide net, as it turns out. But these firms – Visa and MasterCard are among the fund’s top holdings – can prosper in almost any kind of economy and can survive almost any technological advances that may be affecting their industries. Apple Pay, Square and PayPal may be revolutionizing how people pay for goods and services, but Visa and MasterCard, says Weaver, are “still the rails on which all of those transactions will take place.” Moreover, he says, “it’s nice to invest in a subsector that is a little bit immune to innovation.”

Weaver ran an IT services fund for another firm, RiverSource Investments, before joining Fidelity in 2008. From the time he stepped in as manager of Select IT Services in February 2009 (a month before the start of the great bull market), the fund earned a 25.2% annualized return, an average of 4.4 percentage points per year better than the typical tech fund.

Red Oak Technology Select (ROGSX) is the smallest fund among our favorites, with just $148 million in assets. Its parent firm, Oak Associates Funds, is based in Akron, far from major tech or finance centers. But Red Oak is still a winner. From the time Mark Oelschlager took over as manager in April 2006, Red Oak returned 10.7% annualized, an average of 2.8 percentage points per year ahead of the typical tech fund.

Some tech investors try to identify the next hot story or the fastest-growing companies. Not Oelschlager. “High-growth companies and companies with exciting stories do well for a couple of years, and then they flame out,” he says. So he focuses on tech companies with sustainable profits and good competitive positions within their industry that trade at bargain prices. “We’re trying to identify companies that will be around for a long time and make a lot of money for a long time.”

To build his portfolio, Oelschlager hews closely to three core principles: First, he takes a long-term view. Second, he keeps the portfolio to 25 to 40 stocks at any given time (the fund held 38 stocks at last report). Finally, he stays fully invested. If he finds a new company he wants to invest in, he has to sell a current holding to make room for it. That said, when he buys, he tends to hold. The fund’s turnover rate is 15%, which implies that holdings stay in the fund for nearly seven years, on average. By contrast, the typical tech fund turns over its portfolio at least once a year. The fund’s top holdings at last report were Cisco Systems, Northrop Grumman and Oracle.

You won’t see many of the grande dames of tech among the 69 stocks in T. Rowe Price Global Technology (PRGTX). “I don’t own IBM, Hewlett-Packard, Samsung Electronics and SAP,” says manager Joshua Spencer. That’s because he approaches this sector with the view that technology is about change and innovation. “It’s a winner-take-all kind of market,” he says. “It pays to invest with the winners, and we try to bet on the right side of change.”

Some of the winners he has bet on are well-known, and others are not. Amazon and Google, for instance, are among his top holdings. So are Tencent Holdings, a Chinese company that owns Internet and mobile businesses, electric carmaker Tesla, and Zillow, the real-estate data firm. What ties them together: They each play a unique role in revolutionizing their industry. “They each do something no one else can do as well as they do, and they’re gaining share, and they have a strong competitive position,” says Spencer.

Spencer says he and his team of 20 analysts do “deep field research” on companies in the U.S., Asia and Europe to find good ideas. The process has won results: Over the past 10 years, the fund tops the charts of all tech funds, with an annualized return of 13.4%. That’s an average of 4.6 percentage points better per year than the typical tech fund. And considering how volatile tech stocks can be, the fund has been remarkably consistent. Except for one instance, in each of the past 11 calendar years (including so far in 2014), the fund ranked among the top 37% of its peers or higher. (The exception was in 2007, when the fund’s 13.4% return lagged the typical tech fund by 2.7 percentage points.) Though Spencer’s tenure as manager goes back only 2.5 years, he has been a key analyst with the fund since 2005. Since he became manager in June 2012, his fund returned 28.0% annualized, beating the typical tech fund by an average of 5.7 percentage points per year.

Walter Price and Huahua Chen, the managers of Wells Fargo Advantage Specialized Technology (WFTZX), break the portfolio into three groups. The first group consists of companies that have prospective near-term annual earnings or revenue growth of at least 50% and that could be “the next breakthrough company,” says Price. Facebook, Tesla and Palo Alto Networks, a network-security firm, fit in this category. The second consists of growing companies trading at reasonable prices. Among them are Google and SunPower, a maker of solar panels. The third category includes undervalued companies with a catalyst to spur growth, such as Microsoft and Alcatel, a maker of telecommunications equipment.

The managers also have a rigorous process for selling. They assign one-year and two-year price targets for each stock in the portfolio (the fund at last word held 65 stocks). If a stock hits its shorter-term target, the managers start to trim their shares. Once it hits its longer-term target, they unload the position outright. In 2013, they sold their holdings in high-flying stocks, such as Pandora and Yelp, both of which registered triple-digit gains that year. Those moves, says Price, helped lift the fund to a 42.9% return in 2013, a whopping 7 percentage points better than the typical tech fund. The fund’s long-term record is strong, too: Over the past 10 years, it earned 10.4% annualized, an average of 1.7 percentage points better than the typical tech fund.