Neil Patel, The Motley Fool
4 min read
Because it’s the most closely watched benchmark for measuring the stock market’s performance, the S&P 500 index gets a lot of attention from the investment community. To get a pulse on the performance of the American economy, it makes sense to look at these 500 or so large and profitable companies.
But investors should learn about other stock market indexes, such as the Nasdaq-100, which tracks the performance of the 100 largest non-financial stocks traded on Nasdaq. The exchange-traded fund (ETF) to watch is the Invesco QQQ Trust (NASDAQ: QQQ).
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This has been nothing short of a spectacular investment vehicle to have owned in your portfolio. And investors who allocate just $100 per month to the QQQ could see their wealth grow into this huge amount in 20 years.
An exceptional track record
In the past decade, the Invesco QQQ Trust has generated a monster total return of 543% (as of Sept. 16). Assuming this pace continues over the next 20 years, a $100 monthly investment would grow into almost $261,000 by 2046. This is nearly four times what the historical 10% annualized average return of the S&P 500 index would yield.
It’s impossible to be disappointed with the QQQ’s historical performance. The main driver of these impressive gains has been the fantastic success of the technology sector as a whole. This ETF specializes in disruptive and innovative businesses. And investors have benefited from their progress.
The top 10 stocks in the QQQ represent a significant 47% [https://www.invesco.com/qqq-etf/en/about.html of the entire portfolio. While there are 100 or so companies in total, investors should be aware of the level of concentration. Returns depend on how these outsize holdings fare.
Businesses like Nvidia, Apple, and Microsoft have driven the gains. All their stocks have crushed the S&P 500 index in the last 10 years. The worst performer of the three was Microsoft, but even its share price soared 763% since mid-September 2016. And these companies have grown earnings meaningfully thanks to notable secular trends. These include areas like artificial intelligence (AI), mobile computing, and cloud computing.
Betting on the rising importance of technology has clearly been a very lucrative move.
Looking ahead
