Had you invested in the S&P 500 in April 2015, you would've been able to achieve a total return of 228%. This is well above the historical, long-run annual average of roughly 10%.
But what if you could outperform the widely followed benchmark? That's just what this monster exchange-traded fund (ETF) has done. In the past decade, it has produced a total return of 390% despite trading 15% below its all-time record that was reached on Feb. 19 (as of April 3).
Continue reading to learn why you should buy this investment vehicle right now and hold it for the next 10 years.
Betting on an obvious trend
In the past decade, investors have seen firsthand just how important technology has become to the overall economy. Various secular trends have played a part, like digital payments, digital advertising, cloud computing, streaming entertainment, and e-commerce. It's unlikely that these themes will have less of an impact in the future. It's going to be the opposite, with these tech forces having a greater influence on society.
That's why investors should take a closer look at the Invesco QQQ Trust (QQQ +0.68%). It contains the largest 100 non-financial companies that trade on the Nasdaq exchange. It focuses very much on some of the most innovative businesses on the face of the planet.
Well-known enterprises have a huge weight. The top three holdings are Apple, Microsoft, and Nvidia. The top 10 positions combined make up almost 49% of the portfolio, so there is concentration at the top.
However, the beauty of this strategy is that it is not required on the part of investors to try and pick a single winner behind various technological trends. Making long-term predictions is hard. Buying the QQQ ensures you gain adequate exposure to whatever stocks end up being the most lucrative.
NASDAQ: QQQ
Key Data Points
Superior performance at a low cost
If you invested $10,000 in this ETF a decade ago, you'd be sitting on a portfolio balance of $49,000. That fantastic gain comes in well ahead of the S&P 500. This clearly points to the merits of the QQQ for any investor seeking capital appreciation.
Past results aren't guaranteed to repeat in the future, of course. But given the powerful tailwinds previously mentioned, it's easy for investors to be optimistic over the next decade and beyond. This is despite all the worries about the current economic backdrop.
I think there are two other benefits of buying the QQQ. One is the fact that investors don't need fancy finance or computer science degrees to be able to analyze businesses and stocks to select. This frees up a ton of time that can be directed to other endeavors.
Another obvious benefit is the cost. Only 0.2% of your assets go to the fee. This is much lower than the fees charged by many asset managers and hedge funds that actually end up underperforming.
A way to boost returns
Buying the QQQ right now, especially when it's 15% off its high, is a smart decision. Investors don't have to stop there. In addition to the initial sum, investing a small amount monthly or quarterly allows you to take advantage of dollar-cost averaging. This supports a habit of consistent investment, which can boost your portfolio.
It's all about time in the market. But be sure to maintain a long-term outlook. And be prepared for volatility, as nothing goes up in an uninterrupted straight line.
Investing in the QQQ today, and maybe even at ongoing intervals, is a surefire way to increase your wealth over the next 10 years.
