Ken Griffin is a billionaire investor best known for founding the hedge fund Citadel Advisors. While it owns a number of individual stocks across all industry sectors, the fund takes positions in more-passive vehicles as well. Last quarter, Citadel bought 2,822,010 shares of the Invesco QQQ Trust (QQQ +2.08%) exchange-traded fund (ETF) -- increasing its stake by 584%.
Below, I'll explore what makes the Invesco QQQ Trust such a compelling opportunity for long-run investors, and I'll detail some tailwinds that could bring even further gains for the fund.
NASDAQ: QQQ
Key Data Points
Invesco QQQ Trust at a glance
One of the biggest benefits of owning ETFs is that they provide access to a broad basket of stocks, helping investors build a diversified portfolio. Moreover, ETFs often follow specific themes or market indexes, giving exposure to emerging opportunities without requiring positions in individual companies.
The Invesco QQQ Trust is modeled off the Nasdaq-100 index. The fund owns shares in many of the world's largest businesses, including Apple, Microsoft, Nvidia, Broadcom, Meta Platforms, Costco, Tesla, Amazon, and Alphabet.
Image source: Getty Images.
How has the ETF performed in the long run?
Nearly 60% of Invesco QQQ's holdings are technology stocks, with another 18% concentrated among consumer discretionary companies. The remaining positions are spread across other sectors such as healthcare, telecommunications, utilities, industrials, real estate, energy, and consumer staples.
In the chart below, I have benchmarked Invesco QQQ against a set of other leading ETFs -- particularly those that track the S&P 500.
Over the past 10 years, Invesco QQQ has been a multibagger for patient investors and has handily topped the broader market.
Of course, much of these gains stem from the fact that Invesco QQQ is a much more concentrated vehicle than the S&P 500. The Nasdaq-100 is made up mostly of growth stocks in emerging market trends such as artificial intelligence (AI), e-commerce, semiconductors, cybersecurity, and enterprise software.
Is now a good time to buy the Invesco QQQ Trust?
One thing to remember about ETFs is that you have to pay a management fee known as an expense ratio. According to Invesco QQQ's fact sheet, the fund has a modest expense ratio of 0.20%.
I think what makes Invesco QQQ so attractive is its exposure to many high-growth industries while simultaneously owning some of the most influential players among these sectors. In other words, I don't see the Nasdaq-100 as an index featuring many (if any) speculative companies. Rather, the index has some of the largest and most established companies operating across several markets.
Moreover, the fund has a proven track record of success over a long time horizon. Right now, I see two tailwinds that could help position Invesco QQQ for a new wave of growth as it looks to continue outperforming the broader market.
First, as the macroeconomic picture continues to show signs of improvement, I think consumer discretionary stocks will begin to witness some new life. And second, the Nasdaq-100 looks particularly lucrative considering AI should continue making waves within and beyond the technology sector for years to come.
For these reasons, I think Invesco QQQ is well-positioned for even further gains, and I see now as a great time to follow Citadel's lead and invest in the ETF.
