Key Points
-
The Invesco QQQ ETF has consistently outperformed the S&P 500 over the years.
-
It invests in the 100 largest Nasdaq stocks, excluding financial stocks.
-
This is the one ETF that should form the core of a long-term portfolio.
-
When building an investment portfolio, there are certain stocks and exchange-traded funds (ETFs) that serve strategic purposes. You want a range of investments that provide alpha in strong markets, downside protection in weak markets, and stocks across different styles, sectors, and geographies to balance the portfolio.
That’s why diversification is so important. How you choose to diversify your portfolio with specific stocks and ETFs is up to you.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
But then there are core holdings — ETFs to set and forget and hold in your portfolio no matter what the market is doing. For me, the one ETF I’d start with as a core holding is the Invesco QQQ Trust (NASDAQ: QQQ).
The dominance of tech stocks
The Invesco QQQ is the fifth-largest ETF in the world with some $489 billion in assets under management. That’s because it is a core holding for so many investors.
The QQQ tracks the Nasdaq-100 index, which consists of the 100 largest stocks trading on the Nasdaq, except for financial sector stocks. The ETF is often seen as a bellwether for technology and telecommunications stocks, which make up about three-quarters of the portfolio. Technology stocks make up 68% while telecom stocks represent 6%.
Consumer stocks make up 17% while the other 8% comes from healthcare, basic materials, industrials, utilities, and energy. The index was created in 1985 to showcase “industries at the forefront of technological and innovative growth.”
Its three largest holdings are Nvidia, Apple, and Microsoft — same as the S&P 500 — but it is far more concentrated in big tech stocks than the S&P 500.
Whether it was personal computers back in the 1980s, internet stocks in the 1990s, smartphones in the 2000s, cloud computing in the 2010s, or artificial intelligence in the 2020s, tech stocks have driven markets for the 40-plus years since the Nasdaq-100 launched. I think it’s fair to assume that will continue over the next decades, whether it’s space flight, quantum computing, autonomous vehicles, or something we haven’t even thought of yet.
QQQ has stellar long-term performance
The QQQ fund has been around since March 9, 1999, the heart of the dot-com boom, and since then, it has posted an average annualized return of 10.6%. By comparison, the S&P 500 has averaged an 8.6% return.
Over the past 20 years, QQQ has an average return of 16.1% compared to 11.1% for the S&P 500. And over the past 10 years, it has returned 20.6% on average versus 15.5% for the S&P 500.
Data by YCharts.
If you are investing for the long term, whether it’s 10, 20, or 30 years out, the QQQ is a must-own. There will be short-term volatility, and that is to be expected. But over the long haul, the ETF is highly likely to weather those ups and downs and deliver market-beating returns.
Should you buy stock in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $350,756!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,363,905!*
Now, it’s worth noting Stock Advisor’s total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 23, 2026.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
