An ETF is only as good as its holdings. That’s advice that investors, particularly those with long-term time horizons, need to remember. To be sure, the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ) have outperformed broader benchmarks such as the S&P 500 and the Russell 1000. That’s because those ETFs have the right holdings. Additionally, in the cases of high-flying large-cap growth stocks, they have larger weights to those names.
The two Invesco ETFs are homes to several of the best-performing stocks of the past 25 years. That’s contributed to the ETFs’ significant out-performance of other broad market ETFs.
Familiar Names Driving QQQ Returns
QQQ and QQQM are known as tech-heavy ETFs. So, it may surprise some investors to learn that best-performing stock over the past quarter century is Monster Beverage (MNST) – one of the ETFs’ consumer staples holdings. Not surprisingly, Nvidia (NVDA), the largest holding overall in QQQ and QQQM, has also contributed mightily to the ETFs’ long-term returns.
As experienced investors know, Apple (AAPL), the second-largest QQQ/QQQM holding, has been on a tear for much of this century, lifting it to the number three on the list of best-performing stocks over the past 25 years. YCharts noted that a $10,000 investment 25 years ago in AAPL would be worth $11.27 million today. This estimate assumes dividends were reinvested.
ETFs such as QQQ and QQQM offer another advantage for long-term investors. They’re ideal vehicles for investors looking to make small but regular allocations. That’s something many investors are already doing with ETFs. Over time, those steady contributions can grow to substantial stakes. Nvidia’s long-term story confirms as much.
“Using Nvidia one of the world’s most valuable companies and second-best performer over the last 25 years–as an example, contributing $100 each month since December 2000 would’ve equaled a net total contribution of $30,000, with a total return of $13 million,” added Y Charts. “If the monthly contribution was $250 each month ($75,000 total), the net balance after those 25 years would be $32.6 million today.”
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