The Invesco QQQ Trust (NASDAQ: QQQ), a popular exchange-traded fund (ETF) that tracks the Nasdaq 100 index, offers broad market exposure with a significant emphasis on technology. The Nasdaq 100, composed of 100 non-financial stocks, is often the preferred listing platform for emerging tech companies, leading to its tech-heavy orientation. However, investors should note that the index is not exclusively tech-focused.
While the Invesco QQQ Trust is frequently favored by investors seeking broad market exposure, it carries a notable concentration risk due to its significant exposure to high-profile tech stocks such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN) – part of the so-called "Magnificent Seven". These stocks account for approximately one-third of the portfolio's value. About 43% of the ETF's portfolio is diversified across sectors like consumer discretionary and healthcare.
In terms of costs, the Invesco QQQ Trust's 0.2% expense ratio may seem competitive when compared to actively managed mutual funds. However, it falls short when compared to other ETFs like the SPDR S&P 500 ETF Trust (ASX:SPY) and Vanguard Information Technology ETF which offer lower expense ratios.
Investors considering the Invesco QQQ Trust for quick access to top Nasdaq 100 stocks should weigh these factors – its concentration risk and higher expense ratio – before investing.
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