The Invesco QQQ Trust (QQQ -1.91%) is the fifth-most popular exchange-traded fund (ETF) worldwide as measured by assets under management. Several prominent billionaires added to their positions in the first quarter, as detailed below:
- Ken Griffin of Citadel Advisors added 2.2 million shares. The Invesco QQQ Trust now ranks as the third-largest position in the hedge fund, excluding options.
- Israel Englander of Millennium Management added 474,300 shares. The ETF now ranks among the 25 largest positions in the hedge fund, excluding options.
- Steven Cohen of Point72 Asset Management added 7,950 shares. The ETF remains a relatively small position in the hedge fund.
Citadel, Millennium, and Point72 are three of the most profitable hedge funds in history as measured by net gains. That makes all three money managers good sources of inspiration, and individual investors should consider following their lead with this ETF. The Invesco QQQ Trust could turn $500 per month into $432,300 in 20 years.
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The Invesco QQQ Trust is heavily invested in technology companies likely to benefit from artificial intelligence
The Invesco QQQ Trust measures the performance of the Nasdaq-100, an index that tracks the 100 largest nonfinancial companies listed on the Nasdaq Stock Exchange. The ETF has more than 60% of its assets invested in technology stocks, many of which are likely to benefit as the artificial intelligence (AI) revolution continues to unfold.
The 10 largest holdings in the Invesco QQQ Trust are listed by weight below:
- Nvidia: 9.8%
- Microsoft: 8.7%
- Apple: 7.2%
- Amazon: 5.6%
- Broadcom: 5.3%
- Alphabet: 5%
- Meta Platforms: 3.5%
- Netflix: 2.8%
- Tesla 2.6%
- Costco Wholesale: 2.3%
AI spending across hardware, software, and services is forecast to grow at 35.9% annually through 2030, according to Grand View Research. Several companies listed above should benefit.
Amazon, Microsoft, and Alphabet are the three largest public cloud providers, meaning demand for AI infrastructure should be a tailwind. And Nvidia is the undisputed leader in data center GPUs, the most popular type of AI accelerator.
Apple has introduced generative AI capabilities for iPhones. Meta Platforms is leaning on AI to increase user engagement across its social media platforms and improve outcomes for advertisers.
Netflix recently started using generative AI to create content for movies and shows. Broadcom is the market leader in AI networking chips and custom AI accelerators, and Tesla recently launched an autonomous ride-hailing service.
History says the Invesco QQQ Trust can turn $500 invested monthly into $432,300 in 20 years
Excluding dividends, the Invesco QQQ Trust advanced 1,340% during the last two decades, which is equivalent to 14% annually. Including dividends, the index fund achieved a total return of 1,560%, compounding at 15% annually. I will assume a more modest return of 12% annually to introduce a margin of safety.
At that pace, $500 invested monthly in the fund would be worth $105,200 in one decade and $432,300 in two decades. Some investors may prefer to save more or less each month, so the chart below shows how different contribution amounts would grow over time, assuming annual returns 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 in the past due to its heavy exposure to technology stocks. The index fund fell more than 12% from its record high seven times in the last decade. Similar volatility is likely in the future.
Second, the ETF has an expense ratio of 0.2%, meaning shareholders will pay $20 per year on every $10,000 invested. Comparatively, the average expense ratio on U.S. index funds and mutual funds was 0.34% in 2024.
