Record Gains in S&P 500: Is QQQ the Next Smart Investment?
Despite recent market volatility, the S&P 500 (SNPINDEX: ^GSPC) has shown remarkable growth over the past five years, climbing over 103% as of now. However, numerous individual stocks and funds have outperformed the index during this period. With a strategically curated selection of investments, significant market advantages can be achieved. While future market trends are uncertain, one growth ETF stands out with the potential to surpass the S&P 500 over the next decade.
Strong Performer: Invesco QQQ ETF
If you’re exploring a growth ETF with a strong history of resilience and better-than-average returns, Invesco QQQ (NASDAQ: QQQ) may be worth considering. Since its inception in 1999, QQQ has demonstrated an impressive ability to weather economic downturns, including the dot-com bubble, the Great Recession, the COVID-19 crash in 2020, and the bear market of 2022, alongside various smaller corrections.
Importantly, this ETF has not only survived turbulent times but has also significantly outperformed the broader market. Over the last decade, QQQ has more than doubled the total returns of the S&P 500.
^SPX data by YCharts
Nevertheless, potential investors should be aware that around 57% of QQQ’s holdings are in the technology sector, known for its volatility. However, many top holdings, such as Microsoft, Nvidia, and Apple, constitute about 25% of the fund. The top 10 holdings represent over 50%, increasing the likelihood of the fund’s resilience during market fluctuations.
Cautionary Notes for Investors
It’s essential to adopt a long-term perspective when investing. The market’s unpredictability can impact even well-performing stocks and funds, especially in the event of a recession or bear market. This is particularly pertinent for growth ETFs like QQQ, which, despite staggering long-term performance, has experienced years of underperformance.
For instance, after the dot-com bubble burst in 2000, QQQ suffered a significant decline, registering below-average returns for a large portion of the ensuing decade. Yet, over time, it has nearly tripled the total returns of the S&P 500.
^SPX data by YCharts
The last decade has proven to be exceptionally favorable for QQQ, and it may continue to outperform the S&P 500 in the coming years. However, maintaining a long-term outlook is crucial. Historically, the most successful investors with this ETF are those who remained committed during challenging periods.
While no investment offers guarantees, Invesco QQQ has a longstanding history of enduring volatile phases and achieving strong long-term returns, making it a viable option for those looking to balance risk and reward.
Considering an Investment in Invesco QQQ Trust?
Before purchasing shares of Invesco QQQ Trust, it is important to consider the following:
The Motley Fool Stock Advisor analyst team has identified what they believe to be the 10 best stocks to buy right now, and Invesco QQQ Trust is not included among them. The selected stocks have the potential for significant returns in the future.
For example, if you had invested $1,000 in Netflix when it made this list on December 17, 2004, you would have approximately $642,582 today! Or, if you had invested $1,000 in Nvidia when it was recommended on April 15, 2005, you’d have around $829,879 today!
It’s also worth noting that Stock Advisor has a total average return of 975% — far exceeding 172% for the S&P 500. Don’t miss out on the latest top 10 stocks, which are available to members of Stock Advisor.
*Stock Advisor returns as of May 19, 2025
Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
