Institutional asset managers recently filed their latest Forms 13F, disclosures required by the SEC for anyone who owns at least $100 million in equity securities like stocks and index funds. Several hedge fund billionaires purchased the Invesco QQQ Trust (QQQ 2.29%) in the first quarter, as detailed below:
- Louis Bacon's Moore Capital Management purchased 31,000 shares. The Invesco QQQ Trust remains a relatively small position in the portfolio.
- Steven Cohen's Point72 Asset Management added 7,950 shares. The Invesco QQQ Trust remains a relatively small position in the portfolio.
- Ken Griffin's Citadel Advisors added 2.2 million shares. The Invesco QQQ Trust is now the third-largest position in the portfolio, excluding options.
- Israel Englander's Millennium Management added 474,300 shares. The Invesco QQQ Trust now ranks among the 25 largest positions in the portfolio, excluding options.
Investors should know two things about the Invesco QQQ Trust. First, the index fund tracks 100 stocks in the Nasdaq Composite (^IXIC 2.47%), which dropped into market correction territory in the first quarter. Second, history says the index fund can turn $500 per month into $432,300 in 20 years.
Image source: Getty Images.
The Invesco QQQ Trust provides exposure to many technology companies likely to benefit from artificial intelligence
The Nasdaq-100 tracks 100 of the largest companies listed on the Nasdaq Stock Exchange. The index is rebalanced quarterly and reconstituted annually. It excludes financial companies and is heavily weighted toward the technology sector. The Invesco QQQ Trust measures the performance of the Nasdaq-100.
The 10 largest positions in the index fund are listed by weight below:
- Microsoft: 8.6%
- Nvidia: 8.2%
- Apple: 7.5%
- Amazon: 5.4%
- Alphabet: 4.9%
- Broadcom: 4.5%
- Meta Platforms: 3.5%
- Netflix: 3.2%
- Tesla: 3.1%
- Costco Wholesale: 2.8%
Importantly, several companies listed above are likely to benefit from demand for artificial intelligence (AI) in the coming years. Microsoft, Amazon, and Alphabet are the three largest cloud computing platforms. Nvidia is the leading supplier of data center GPUs. Broadcom is the market leader in custom AI chips. Meta Platforms is using AI to improve engagement across its social media properties. And Tesla is developing robotaxis and autonomous humanoid robots.
How the Invesco QQQ Trust can turn $500 per month into $432,300
The Invesco QQQ Trust advanced 1,250% during the last two decades, compounding at 13.9% annually. But if dividend payments are included, the index fund achieved a total return of 1,470%, increasing at 14.7% annually.
Admittedly, anticipating an annual return of 14.7% may be overly optimistic. So, investors should introduce a margin of safety by assuming a more modest annual return of 12%. At that pace, $500 invested monthly in the Invesco QQQ Trust will be worth $105,200 in one decade and $432,300 in two decades.
Importantly, some investors may wish to save more or less than $500 per month. The chart below details how different monthly contribution amounts will grow over time, assuming an annual return of 12%.
|
Holding Period |
$200 Per Month |
$400 Per Month |
$600 Per Month |
|---|---|---|---|
|
10 Years |
$42,100 |
$84,200 |
$126,300 |
|
20 Years |
$172,900 |
$345,800 |
$518,700 |
Returns were determined using the investor.gov compound interest calculator.
Investors need two more pieces of information. First, the Invesco QQQ Trust has been very volatile throughout history because it is so heavily weighted toward the technology sector. In the last decade, the index fund fell more than 10% from its record high eight times, and it fell more than 20% from its record high four times.
Second, the Invesco QQQ Trust has a modest expense ratio of 0.20%, so shareholders will pay $20 annually on every $10,000 invested in the index fund. Comparatively, the average expense ratio of U.S. index funds and mutual funds was 0.34% in 2024.
