ETFs
4 reasons to buy Invesco QQQ Trust like there is no tomorrow
This ETF has proven that it can be a valuable addition to your portfolio.
Some investors may not want to select individual stocks for all or even part of their portfolio. This is where something like a exchange traded fund (ETF) comes into play.
While an ETF that tracks the S&P500 might attract a lot of attention as it is a leading benchmark for gauging stock market developments, there is another ETF that investors should consider that could potentially lead to returns at higher in the long term. I’m talking about Invesco QQQ Trust (QQQ -0.09%).
Here are four reasons why you should buy this ETF like there’s no tomorrow.
Portfolio composition
The Invesco QQQ Trust is unique in that it tracks the performance of Nasdaq-100 hint. This includes the 100 largest non-financial companies trading on the market. Nasdaq exchange.
It is worth discussing the composition of the ETF. It is heavily weighted in two sectors. Technology has a strong presence, representing 59% of the fund’s assets, while consumer discretionary represents 18%. These areas of the market are usually where many winners come from.
Investors are certainly familiar with some of Invesco QQQ Trust’s top holdings. The said “Magnificent Seven” together represent 42% of assets. They are among the most dominant companies on planet Earth. And they have proven their ability to disrupt diverse industries.
The Invesco QQQ Trust also has 23% of the portfolio invested in sectors other than technology and consumer discretionary. This allows for at least some level of industrial diversification.
An impressive track record
If you had invested $10,000 in Invesco QQQ Trust 10 years ago, you would have $54,600 today. This translates to a superb annualized return of 18.5% including dividends. It is difficult to dispute this assessment.
The Invesco QQQ Trust’s gain outpaces the S&P 500 and 341% returns by 232% and Nasdaq Composite respectively, have been able to achieve since June 2014. Again, this comes down to this ETF’s broad exposure to the technology and consumer discretionary sectors.
Investors should not blindly assume that this exceptional performance will continue. But while past results are no guarantee of future returns, the companies that dominate the Invesco QQQ Trust generally have broad economic moats, solid growth prospects and aim to be leaders in the race for artificial intelligence. .
Don’t forget the fees
Some professionals in the investment industry have been known to charge exorbitant fees for managing the capital of others. For example, typical active fund managers charge annual fees based on a percentage of assets managed. And hedge funds cost even more. Over a long period of time, these fees can seriously eat into an investor’s returns, so it is important to take them into account.
Fortunately, the Invesco QQQ Trust has an expense ratio of just 0.20%. This means that for every $10,000 invested in the ETF, you only pay $20 in annual fees. This is a very compelling proposition, especially when we remember its impressive history.
Low maintenance
Investors rightly focus on the most obvious factors when looking at an ETF, like the composition, track record, and fees mentioned earlier. However, there is one overlooked aspect that deserves some attention.
If you don’t plan to retire for at least the next 10 years, then you may want to adopt a retirement strategy. spread of costs in dollars in Invesco QQQ Trust each month or quarter. It requires almost no effort on your part. This makes investing in Invesco QQQ Trust a very low maintenance way to build wealth.
And that leaves you plenty of time to focus on the things that are most important to you.
Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Mad Motley has a disclosure policy.