Invesco’s QQQ celebrates silver anniversary on a roll

investmentnews.com:

The Invesco QQQ ETF is celebrating silver anniversary this year as it marks 25 years of existence. The returns thus far in 2024 have been pure gold. The question facing investors now is whether the fund can make that “magnificent” momentum last.

The QQQ tracks the Nasdaq-100, an index of 100 largest nonfinancial companies listed on the Nasdaq. The QQQ is up 7.3 percent year to date and 50.7 percent over the past 12 months. That’s a heck of an anniversary present for investors, outpacing the S&P 500 index, which is up 7.1 percent this year and 30.3 percent over the past year.

The QQQ is the fifth largest ETF in the world, with net assets of $254 billion, or about half the size of the largest ETF, the SPDR S&P 500 ETF Trust (SPY).

Of course, the QQQ is a far more concentrated index than the S&P 500, both in terms of the number of stocks and the number of sectors represented. It’s also on a “magnificent” run because a full seven of its top seven holdings are members of the so-called“Magnificent 7” – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla – a group of stocks that has surged over the past year due to its members’ AI associations.

Microsoft, for example, makes up 8.8 percent of the QQQ and is up 12 percent in 2024 and 63.5 percent over the past 12 months. NVDA is 5.6 percent of the QQQ and is up a whopping 91 percent in 2024 and 300 percent in the past 12 months. And so on.

The worry among investors and their advisors is that the Magnificent 7 could lead the QQQ down just as fast as it led it up. Sure the QQQ was up 55 percent in 2023, but it also fell more than 32.5 percent when markets fell apart in 2022.

Paul Schroeder, QQQ equity product strategist at Invesco, understands investors’ concerns over