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If you’ve ever used a crockpot, you know the value of appliances that combine different ingredients into a good, slow-cooked meal. This explains the appeal of exchange-traded funds (ETFs), which allow investors to diversify their portfolios and grow their wealth while making just one investment. If you’re looking for an ETF that offers solid growth potential, you might like this one, which has beaten the S&P 500 Index by almost 50% over the past decade.
The Invesco QQQ Trust ETF (Nasdaq: QQQ) is a high-performing ETF with a diversified equity portfolio containing shares of leading companies in several lucrative sectors. The technology sector is one of the biggest profit drivers on Wall Street, and the Invesco QQQ Trust ETF aims to capitalize on that trend. The top 10 stocks in this ETF include Magnificent Seven stocks and many other holdings in the Nasdaq 100.
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According to the ETF’s homepage and the Money section of US News, more than 50% of Invesco QQQ Trust’s portfolio is made up of technology stocks. The remainder consists of carefully selected stocks from other growth sectors, including:
· Utilities, financial services, real estate, energy, industrials: all less than 6% each
While QQQ is heavily focused on technology, it’s worth noting that QQQ’s equity stakes prioritize companies with robust research and development capabilities. This gives each of these stocks a greater chance of creating an innovation that increases profitability and drives stock prices higher.
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Another consideration in favor of this ETF is that the energy sector is booming for several reasons. First, Big Tech is feverishly searching for energy sources to power the hyperscale data centers that AI needs to expand its capabilities. Second, the new Trump administration has declared its support for fossil fuels. Both factors should boost QQQ’s energy sector holdings over the next four years.
Most importantly, QQQ is performing well for investors. According to Invesco’s website and public filings, QQQ has generated a return of 156.77%, compared to the S&P 500 Index’s 107.92%. QQQ’s ten-year return of 421.53% radically exceeds the S&P 500 Index’s 250.02%, and a $10,000 investment in QQQ 10 years ago would be worth $52,153 today.
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If QQQ is one knock, high performance doesn’t come cheap. QQQ’s performance history and the fact that it appears positioned to continue delivering results for investors have made it a highly desirable offering. According to Benzinga, buying QQQ costs $520.90 per share. It does pay a small quarterly dividend of 0.50% per share ($2.60), but QQQ’s long-term growth potential, not passive income, is the main source of its appeal.
Risks to consider include QQQ’s heavy emphasis on Big Tech, which represents more than 50% of the ETF’s holdings. However, the explosion in value of these stocks has also fueled much of QQQ’s growth, and it doesn’t look like the technology will slow down anytime soon. If you can handle the stock price and are looking for a diversified ETF with high growth potential, the Invesco QQQ Trust ETF is worth considering.
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This article This Growth-Focused ETF (QQQ) Has Returned 421% Over the Past Decade—and Outperforms the S&P 500 Index by Nearly 50% originally appeared on Benzinga.com
