Come and knock on our door …

Three’s company, with both BlackRock and now State Street lining up to launch Nasdaq 100 ETFs. The funds would challenge long-time leader Invesco, which has dominated the space with its highly successful Invesco QQQ Trust. State Street Investment Management filed with the Securities and Exchange Commission on Tuesday for the SPDR Nasdaq 100 ETF, just a day after BlackRock’s iShares filed for its own. Those forthcoming funds are a result of Nasdaq opening up licensing for the index, which includes the 100 biggest US companies, excluding financial services.

Whether the two new entrants will be able to take market share from QQQ, and the company’s smaller Nasdaq 100 ETF (QQQM), may come down to fees and brand preference. But the yet-to-be-launched funds may also have something to do with a potential IPO on the horizon. “A big part of it is just that there are folks who are brand loyal,” said Dave Nadig, president and research director at ETF.com. “So if you want to get exposure to the Qs’ because you’re trying to game the SpaceX inclusion pop, then having a BlackRock or Vanguard or State Street, etc., way to play it makes some amount of sense.” On that note, the existing iShares Nasdaq Top 30 Stocks ETF (QTOP) may also be a way investors look for SpaceX exposure after the initial public offering, he said.

Jack of all Trades

ETF investors are cost-conscious. Over the past 12 months, QQQM has pulled in more money than QQQ, which likely is partly because of its 3 basis-point fee advantage (QQQ charges 18 bps, compared with 15 for QQQM). And in the first two months of 2026, the $70 billion QQQM raked in $1.6 billion, compared with net outflows of $8 billion from QQQ, per data from Morningstar Direct. “Fees will likely play a very significant role when competing with QQQ’s existing scale. Assuming lower fees and the fact that both BlackRock and State Street have well-established ETF suites, it shouldn’t be difficult to attract investors to these products,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “It’s an interesting move, given the recent news that SpaceX and other potential IPOs might be able to join the Nasdaq 100 more quickly after going public.”

Nasdaq pointed to more licenses for a “select set of partners” in the US, but it did not name names or specify how many companies might be able to add Nasdaq 100 ETFs, in comments it issued Monday. For its part, Invesco cited the 25-year history of its flagship ETF, stating that, “There is only one QQQ.” Following BlackRock’s filing, Bloomberg reported that Invesco’s stock dropped by over 5%. It’s also worth noting that while the stock is down 15% year to date, it’s up 79% over a year.

Three’s a Crowd? Having significantly lower fees would certainly steer some investors to the new ETFs, but even that won’t convince everyone, Nadig said. “Assuming that Nasdaq license fees aren’t insane, there’s plenty of room for cost competition, too. The cheapest way to get exposure right now is 15 basis points,” he said. “Given that 3 [basis points] is a pretty good passive baseline, that’s about 12 basis points of erosion you could expect from new players if somebody really wanted to come in and try to kick the Qs to the curb.”

Move over gold, the energy sector is the new safe haven for ETF investors.

US-listed ETFs attracted just $104 billion of inflows last month, 40% below the $172 billion six-month average, as investors grappled with volatility, growth concerns and inflation risks amid the war with Iran, according to data from State Street Investment Management. Just half of those ETFs attracted assets in March, compared with 70% over the past six months. But while investors were generally subdued spenders, they did pour a record $5 billion into energy sector ETFs as the closure of the Strait of Hormuz caused oil prices to surge. It’s an area of interest for both clients and advisors as the Iran war disrupts the markets.

“One place to hide out was to rotate into the asset that was most positively impacted by the events in Iran as a result of the supply shock … anything tied to the spot price of oil,” said Matthew Bartolini, global head of research strategists at State Street. “We know that energy sector ETFs and energy sector companies have a beta sensitivity to the spot price of oil that can range, but it is positive.”

Energy In, Gold Out

While soaring spot oil prices contributed significantly to energy ETFs’ success in March, investors were turning to them even earlier this year. Through February, the sector had already gained 24% following a political shake-up in Venezuela and an upturn in the ISM Manufacturing PMI data, according to State Street. Energy funds have now marked a record 14 weeks straight of inflows. While we likely won’t see a repeat of the significant price movement that happened when oil prices moved from well below $100 a barrel to well above, Bartolini expects more volatility, given the headline-driven and unpredictable nature of the oil situation in the Middle East.

However, the energy sector wasn’t the only area of the market that garnered significant inflows in March:

• Short-term government bond ETFs had a record inflow of $29 billion, while their long-term counterparts had $3 billion of outflows. Credit-sensitive sectors experienced $6 billion of outflows.
• “With yields holding above 3.5% and markets in turmoil, short-duration Treasurys offered something stocks and gold couldn’t: attractive income with very little risk,” Morningstar Associate Manager Research Analyst Brendan McCann wrote in a report published Monday.

Speaking of gold, gold-related ETFs saw a record $13 billion of outflows as the precious metal’s spot price fell roughly 12%, State Street reported. Generally considered a safe haven, gold took a hit from both the strengthening of the US dollar and waning expectations of an interest rate cut, McCann explained.

Another Winner. Aerospace and defense-related ETFs brought in a record $3 billion in inflows in March. Investors are buying an area where the firms’ largest customer, the US, is “likely going to need to spend more,” Bartolini said.

Let’s take a trip down memory-stock lane.

Asset manager Roundhill last week launched the Roundhill Memory ETF (DRAM), a fund that targets companies manufacturing memory and data storage products, including Micron, Samsung and Sandisk. The fund is actively managed with an expense ratio of 0.65%. Unlike broader semiconductor and artificial intelligence-centric funds, the product is the first purely memory-focused ETF, with positions in just nine companies, Roundhill says. “The memory market has a major opportunity as the AI build continues,” said Thomas DiFazio, Roundhill ETF strategist. “There are only a couple of specialized players that are able to match the demand and build the type of memory that is needed.”

But with memory stocks currently surging, as they have been for the past year, could Roundhill be a little late to the party?

In a Solid State of Mind

Other funds — including the VanEck Semiconductor ETF (SMH), the iShares Semiconductor ETF (SOXX) and the Invesco PHLX Semiconductor ETF (SOXQ) — have exposure to the memory sector. However, that exposure is often a minimal allocation to Micron, DiFazio argued. He added that a country-specific fund like the iShares MSCI South Korea ETF (EWY) may have half its portfolio tied to memory stocks Samsung and SK Hynix, but the other half is allocated to a broad variety of local companies. “It’s not as precise as it could be, and that’s where we saw the opportunity,” he told ETF Upside.

• Roughly 75% of DRAM’s portfolio is split about evenly between Micron, Samsung and SK Hynix.
• In the past 12 months, those stocks have surged 440%, 268% and 456%, respectively.

Insufficient Disk Space. That concentration may be the fund’s biggest risk, said Dan Sotiroff, senior manager research analyst for Morningstar. “These thematic funds are often trying to capture something that’s hot and of the moment, but because of that, they’re buying stocks that are already pretty high,” he told ETF Upside. While thematic ETFs can perform well in short bursts, they often struggle over longer horizons, Sotiroff said. With so few holdings, DRAM amplifies that risk. “You box yourself into a corner,” he said. “You’re talking about a niche of a niche of a niche here.”

If a client wants to hold a thematic ETF, Morningstar suggests doing it outside of a retirement account. “They’re funny money investments, and even then, you want to keep the positions small, less than 3% of your total investment portfolio,” Sotiroff said.