3 Small ETFs That Performed Like QQQ in 2023

The Invesco QQQ Trust ETF (QQQ) stole the headlines in 2023 with a remarkable 54% return through last Friday’s close. 

That puts QQQ in position to close the year with its biggest percentage gain in its 24-year history and comes on the heels of one of its worst years in 2022 (down 32.6%), its only significant down year since 2002 other than the 2008 debacle. QQQ investors are happy to have essentially reversed last year’s tumble. But looking forward is another story, as 2024 awaits. 

QQQ is a $220 billion ETF that has become akin to a brand name in the ETF business, in the way that an adhesive bandage is more commonly referred to as a “Band-Aid,” which is just a brand of that type of wound-care product. 

QQQ’s fame has a habit of crowding out investor and financial advisor attention from other high-performing areas of the ETF world, whose asset bases tend not to benefit as dynamically as QQQ when its tech-driven portfolio sets records, as it is doing this year. 

So, before the year ends, let’s cite some exchange-traded funds that have performed in line with or more than the mighty QQQ this year, but did so while in relative obscurity. These ETFs each have less than $50 million in assets now, and that is only after their big years in 2023. 

Importantly, while a portion of their portfolios may resemble that of QQQ, their mandates don’t compel them to hold those stocks simply because they are the cap-weighted leaders of the Nasdaq-100. That means that they may have an escape hatch the next time FAANG and friends take a nosedive. Here they are. 

3 Smaller ETFs 

The Spear Alpha ETF (SPRX) invests in global thematic businesses, including in themes like decarbonization, digitalization, robotics, photonics and, yes, artificial intelligence. This is an active ETF with just $19 million in assets. It’s now in its third year. Its 88% return in 2023 has helped it gather $7.5 million in inflows this year.  

The $60 million VanEck Social Sentiment ETF (BUZZ) may have suffered from being considered by some to be gimmicky. But there’s nothing but real money gains for those who have owned it through its 54% gain this year. 

BUZZ holds 75 stocks determined to have the most positive investor sentiment online. Importantly, the underlying index is reconstituted and rebalanced monthly, to keep up with all the buzz, so to speak. 

And the $44 million WisdomTree Cybersecurity Fund (WCBR), despite having a ticker that sounds like my old college radio station, is a smaller fund in a sought-after line of business, and in 2023 rode that to a 67% return. That is well ahead of its three primary peers, all of which have at least $700 million in assets, and underperformed WCBR by 25% to 40% this year. 

Under the QQQ Radar Pays Off 

Sometimes performance drives assets in the door, and sometimes it doesn’t matter because the competition is so much bigger and well known. There are no guarantees in the ETF business, certainly not when it comes to performance.  

But as this year showed, sometimes the holiday gift expression that good things come in small packages doesn’t only apply to jewelry. Sometimes, those gifts are impressive returns from ETFs that fly under the radar of many investors.