Undoubtedly, the S&P 500 is the top index that investors look at to assess how the stock market is performing. It provides a pretty accurate view, given it’s a benchmark of 500 large and profitable companies.
In the past decade, the S&P 500 has generated a total return of 235%, which turned a $10,000 investment into $33,500 today. That’s an impressive gain.
However, I believe there’s one monster exchange-traded fund (ETF) that will beat the S&P 500 between now and 2030. Here’s the investment vehicle you don’t want to miss.
Concentrated in specific sectors
The S&P 500 has 11 different sectors, so investors naturally gain broad exposure to all parts of the economy. However, some sectors have performed better, such as information technology.
This sector is featured prominently in the Invesco QQQ Trust (NASDAQ: QQQ), making up 51% of its holdings. The QQQ is a fund that tracks the performance of the 100 largest non-financial companies that trade on the Nasdaq stock exchange, providing more niche exposure to certain pockets of the market.
Over the last 10 years, the QQQ has produced a fantastic total return of 412%, which would have more than quintupled your starting capital. However, past performance is never a guarantee of future returns. In my opinion, this ETF is poised to continue outperforming the S&P 500 over the next six or so years.
The QQQ is heavily focused on some of the most innovative and disruptive businesses on the planet. And generally, these are the types of companies that can help drive strong portfolio gains.
Ahead of the curve
The ETF’s top holdings are names that you’re likely familiar with. The “Magnificent Seven” are featured prominently. Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla combined represent 42% of the portfolio’s assets. The performance of these stocks has a big influence on the QQQ’s trajectory.
In recent years, that’s been a major benefit. These businesses gain from very broad secular trends that are shifting the economic landscape. Areas like cloud computing, digital advertising, digital payments, streaming entertainment, and electric vehicles have helped lift the QQQ higher.
We also can’t forget about artificial intelligence (AI), the revolutionary technology that everyone can’t seem to get enough of. Owning the QQQ means that investors don’t have to try and pick single stocks that will be winners of the AI boom. The ETF provides broad exposure to basically capture the entire trend.
Is now a good time to invest?
As of this writing, the QQQ trades 6% off its peak level from July of this year. The current dip seems like the perfect opportunity to put some money to work. Of course, that’s after you’ve set up an emergency fund and have eliminated all high-interest debt.
Another smart strategy is to dollar-cost average. Instead of trying to accurately predict when the market will bottom out, investors can simply add savings to the QQQ on a regular basis, say every month or quarter. This eliminates market timing and helps encourage continuous investment.
By owning the QQQ, investors have a legitimate shot at beating the S&P 500 between now and 2030, and maybe beyond that. Moreover, because the expense ratio of 0.2% is compelling, more of the returns generated are actually yours at the end of the day.
This winning combination of high return potential, low costs, and a passive strategy is hard to beat. That makes buying the QQQ an easy decision.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
History Says This 1 Monster ETF Will Beat the S&P 500 Between Now and 2030 was originally published by The Motley Fool
