Bringing Exposure to Large-Cap Growth Stocks

QQQ is up nearly 7% over a one-month period, after entering a death cross in mid-February, which is when the fund’s 50-day moving average falls below the 200-day moving average. 

Stocks have struggled this year due to several macroeconomic headwinds, including decades-high inflation, anticipation for rising rates, and the war in Ukraine, along with lingering disruptions from the pandemic. The Nasdaq, down about 11% year to date, is in its longest bear market since 2008, the Wall Street journal reports.

The slump, however, follows a long rally. The Nasdaq has doubled since the onset of the pandemic just over two years ago, and thus, the significant market turbulence endured by the index this year has presented an attractive opportunity for longer-term investors to add exposure at a “discount.” 

“In my view, the combination of slower economic and earnings growth, exacerbated by tighter fiscal and monetary policy, points to higher quality positioning in large-cap growth stocks — and I believe the recent selloff presents another attractive entry point,” Talley Léger, senior investment strategist at Invesco, wrote earlier this month.

Since 1971, the Nasdaq composite has hit a death cross 31 times, and in 77% of those cases, the index was higher six months afterward, according to Potomac Fund Management, as cited by Bloomberg.

One way for long-term investors to add large-cap growth and tech names to their portfolios is to eschew stock picking and opt for a highly-rated ETF such as the Invesco QQQ ETF (QQQ) or the Invesco NASDAQ 100 ETF (QQQM).

“In my view, the last hike matters more than the first,” Léger continued. “Until then, I remain a buyer of stocks on the dips.”

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