Key insights
- The Invesco QQQ Trust has delivered a 642% total return over the past decade, largely driven by the performance of 'Magnificent Seven' tech stocks and the AI boom. This highlights the significant impact of passive investing and mega-cap tech growth on US equity markets. Despite record highs, the outlook for QQQ and related tech investments remains bullish, suggesting continued strength in the US equity landscape.
In 2023, money tied up in U.S. passive equity investment vehicles surpassed the amount in active funds for the first time. Given the strong performance of top options within the former group, it makes sense.
The Invesco QQQ Trust (QQQ +2.51%) is a fantastic example. If you'd invested $10,000 in this exchange-traded fund (ETF) 10 years ago, here's how much you'd have today.
In the past decade, QQQ has produced a total return of 642% (as of June 16). Investors who allocated $10,000 to this ETF in June 2016 would have about $74,000 today. This translates to a 22% annualized total return.
This ETF has gained from the incredible rise of big tech companies, most notably the "Magnificent Seven" stocks. Combined, they carry a monster market capitalization of $22 trillion. According to research by The Motley Fool, these seven businesses account for 34% of the S&P 500 (^GSPC +1.08%).
Of course, artificial intelligence (AI) has been the most significant tailwind in recent years, as companies have spared no expense to build the essential infrastructure to capture growth. High-end chip maker Nvidia, the most valuable company on Earth, at $5 trillion, is the leading beneficiary of AI. Its share price has skyrocketed 17,420% in the past decade, lifting the QQQ in the process.
Although this ETF trades in record territory, it's hard for investors not to remain bullish over the next 10 years.