Could the Exceptional Index ETF Potentially Create Millionaire Fortunes?
There's nothing wrong with keeping things straightforward. To illustrate, consider how a dish can go awry by deviating too much from its original recipe components - nobody wants a milkshake made with a generous serving of brussels sprouts, right?
Investing doesn't have to be a headache. In fact, by assigning substantial portions of a portfolio to funds that mimic prominent indexes, investors can breathe easy knowing that their investment will primarily mirror the stock market's growth.
Let's dive deeper into one outstanding index-tied exchange-traded fund (ETF) and determine if it has the potential to turn a millionaire.
What is the Invesco QQQ Trust Series I ETF?
In straightforward terms, the Invesco QQQ Trust Series I ETF (NASDAQ: QQQ) is an index-tracking ETF that replicates the *Nasdaq 100* index. That index, in turn, is composed of the 100 largest non-financial stocks that are traded on the Nasdaq stock exchange.
Various businesses within the index are prominent tech titans that one would expect, such as Nvidia, Microsoft, Apple, and Amazon. However, there are also lesser-known gems like Ansys, MongoDB, and The Trade Desk. Lastly, there are even enterprises hailing from outside the tech sector, such as Starbucks, Kraft Heinz, and AstraZeneca.
All in all, this fund provides investors with the opportunity to hold a wide assortment of stocks from various sectors (except for financials). It's true that the index primarily leans toward the tech industry, with approximately 59% of holdings resting within that industry.
Given tech's outperformance over the past few decades, investors should ponder: Is it a bad thing to have a larger portion of investments in the tech sector over the long term? In my opinion, particularly for younger investors, it is not. In fact, slightly overweighting toward the tech sector could potentially be a millionaire-maker move. Here's why.
Large investments in the tech sector have flourished
Let's examine the relative performance across four index-linked ETFs: The Invesco QQQ Trust Series I, the SPDR S&P 500 ETF Trust, the SPDR Dow Jones Industrial Average ETF, and the iShares Russell 2000 ETF.
As you can see, over the previous five years, the Invesco fund has dramatically outperformed the other funds with a compound annual growth rate (CAGR) of 20.5%.
What's more, the difference is even more noticeable if we examine the last 15 years - starting from the conclusion of the Great Recession bear market, which occurred in March 2009.
Indeed, $50,000 invested in the Invesco fund in March 2009 would have grown to more than $1 million today. In contrast, the same sum, invested on the same date, would have grown to just $560,000 in the S&P 500 fund, $454,000 in the Dow fund, and less than $386,000 in the Russell fund.
The moral of the story? Even with the best timing and near-identical index-linked ETF funds, there is a significant disparity in performance amongst these funds - and the tech-heavy Invesco fund has proven to be the most successful.
Of course, there is no guarantee that the Invesco fund will maintain its outperformance. After all, there were periods, such as the dot-com bubble of 2001-2003, when tech stocks significantly underperformed the broader market. However, even taking that challenging period into account, the Invesco fund has slightly surpassed the performance of its major index competitors since the early 2000s.
No investment is a guaranteed winner, but index-linked ETFs are about as close as you can get. They provide investors with a broad range of stocks and boast a strong record of delivering genuine returns over several decades. Moreover, the tech-focused nature of the Invesco fund offers investors a genuine chance to outperform the market, given the robust growth and solid profitability of many of its major components. Investors looking for a smart and uncomplicated way to expand their portfolio to over $1 million should consider the Invesco fund.
Investing in the Invesco QQQ Trust Series I ETF could potentially bring large returns, given its strong performance in the last 15 years. For instance, $50,000 invested in March 2009 would have grown to over $1 million today, highlighting its potential as a millionaire-maker move.
This tech-heavy ETF, which primarily leans towards the tech industry with approximately 59% of holdings, has outperformed other index-linked ETFs in the past five years, proving its potential to deliver significant returns for investors.
