The Ultimate Growth ETF to Buy With $1,000 Right Now
Key Points
The Invesco Nasdaq 100 ETF's portfolio includes 100 of the largest non-financial companies on the Nasdaq Stock Exchange.
The Nasdaq-100 has averaged annual returns of more than 19% over the past decade, outperforming the S&P 500.
The tech sector will drive the ETF's returns, but it also includes companies from other major sectors.
- 10 stocks we like better than Invesco NASDAQ 100 ETF ›
Growth stocks can make great investments because of their return potential. The downside, however, is that such potential upside typically comes with more downside risk. That's why investing in a growth ETF is a smart move. You get the upside potential of growth stocks without taking on the risks that come with focused investments in individual companies.
There are plenty of good growth ETFs to choose from, but they're far from created equal. If you have $1,000 to invest right now and are looking for a growth ETF to add to your portfolio, consider the Invesco Nasdaq 100 ETF (NASDAQ: QQQM). There are no guarantees in the stock market, but you're unlikely to regret this investment years down the road.
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A decade of lucrative returns
QQQM mirrors the Nasdaq-100 index, which includes the 100 largest non-financial stocks trading on the Nasdaq Stock Exchange. It's a newer version of the popular Invesco QQQ Trust ETF, holding the same stocks, but charging lower fees. So, at this point, it makes more sense for new buyers to go with QQQM.
QQQM has only been around since October 2020, but for more perspective on its return potential, let's look at how the Nasdaq-100 index has performed.
Over the past 10 years, the Nasdaq-100 has averaged an annualized return of 19.7%. If you had invested $1,000 then, your position would be worth around $6,028 now -- or $6,648 when including reinvested dividends. The S&P 500 -- which is the go-to benchmark most stocks or ETFs are measured against -- averaged 13.3% annualized returns over that same period.
Image source: Getty Images.
The momentum is likely to continue
Past results don't guarantee future performance, but QQQM is well-equipped to continue delivering market-beating returns over the long term. Much of that potential comes down to the companies leading the way. Here are its top 10 holdings as of Aug. 24:
- Nvidia: 8.16%
- Apple: 7.37%
- Microsoft: 5.86%
- Micron: 4.58%
- Amazon: 4.56%
- Advanced Micro Devices: 3.32%
- Alphabet (Class A shares): 3.28%
- Alphabet (Class C shares): 3.04%
- Tesla: 2.82%
- Broadcom: 2.75%
I wouldn't invest in QQQM expecting 19.7% annualized returns over the next decade, but the companies leading the charge still have plenty of growth opportunities. The AI gold rush has fueled much of QQQM's performance in the past few years, but these companies will be forces regardless of how long the current boom lasts.
Tech stocks have become somewhat synonymous with growth, but QQQM also offers non-tech exposure. The tech sector accounts for 65.75% of the ETF's value, but it also includes other sectors -- such as consumer discretionary, which accounts for 17.22% -- that can help pick up the slack when tech lags.
We can't predict how QQQM will perform going forward, but it's a growth ETF you can comfortably invest $1,000 in without second-guessing its long-term trajectory.
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Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Broadcom, Micron Technology, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
