The Smartest Nasdaq ETF to Buy With $2,000 Right Now

As the Nasdaq Composite Index surged by 40% in 2023, driven by the tech rally and consumer stock rally, investors are looking for ways to capitalize on these trends in 2024. With $2,000 to invest, choosing the right Nasdaq exchange-traded fund (ETF) is crucial. This article will guide you through the process of selecting the smartest Nasdaq ETF to buy right now.

1. Understand your risk tolerance and investment objectives: Before selecting an ETF, assess your financial goals, risk tolerance, and investment horizon. If you're a growth investor with a higher risk tolerance, you might be interested in tech-focused ETFs. On the other hand, a dividend investor may prefer ETFs with a history of increasing dividends.
2. Consider sector-specific ETFs: The Nasdaq Composite Index is heavily weighted towards the technology sector (over 55%). If you're bullish on tech, consider ETFs like the Vanguard S&P 500 Growth ETF (VOOG), which focuses on growth stocks within the S&P 500, including many tech companies. VOOG has advanced by more than 40% this year, outperforming the S&P 500.

Example: VOOG - Vanguard S&P 500 Growth ETF
- Expense ratio: 0.04%
- Top holdings: Microsoft (10.4%), Apple (9.1%), Alphabet (7.7%)
- 1-year performance: +40.2% (as of Dec. 20, 2024)

3. Evaluate ETFs based on their performance and expense ratios: Screen for ETFs with lower expense ratios and strong performance. For example, the iShares Core MSCI Total International Stock ETF (IXUS) is a low-cost, broad-based international stock ETF with a 0.06% expense ratio and a 1-year performance of +25.6% (as of Dec. 20, 2024).

Example: IXUS - iShares Core MSCI Total International Stock ETF
- Expense ratio: 0.06%
- Top holdings: Tencent Holdings (1.7%), Alibaba Group (1.6%), Taiwan Semiconductor Manufacturing (1.5%)
- 1-year performance: +25.6% (as of Dec. 20, 2024)

4. Consider thematic ETFs: If you're interested in specific trends or themes, thematic ETFs can provide targeted exposure. For instance, the ARK Innovation ETF (ARKK) focuses on disruptive technologies like AI, robotics, and genomics. ARKK was the best-performing ETF in January 2025, with a 10.71% return.

Example: ARKK - ARK Innovation ETF
- Expense ratio: 0.75%
- Top holdings: Tesla (10.9%), Square (9.7%), Teladoc Health (7.2%)
- 1-year performance: +38.35% (as of Dec. 20, 2024)

5. Diversify your portfolio: To mitigate risk, consider ETFs that provide broad exposure to multiple sectors or asset classes. For example, the Vanguard Total International Stock ETF (VXUS) offers exposure to developed and emerging markets, with a diversified mix of stocks across various sectors.

Example: VXUS - Vanguard Total International Stock ETF
- Expense ratio: 0.05%
- Top holdings: Tencent Holdings (1.7%), Alibaba Group (1.6%), Taiwan Semiconductor Manufacturing (1.5%)
- 1-year performance: +25.6% (as of Dec. 20, 2024)



By following these steps and considering the examples provided, investors can identify promising Nasdaq ETFs that align with their risk tolerance and investment objectives. Keep in mind that market trends, such as the AI and consumer stock rallies of 2023, play a significant role in shaping the performance of Nasdaq Composite ETFs. By staying informed about these trends and rebalancing your portfolio as needed, you can capitalize on these trends in 2024.

In conclusion, the smartest Nasdaq ETF to buy with $2,000 right now depends on your individual investment goals and risk tolerance. By carefully evaluating ETFs based on their performance, expense ratios, and alignment with market trends, you can make an informed decision and build a strong portfolio for the coming year.