How QQQ can fit into your portfolio

Large-Cap stocks tend to be the largest portion of many portfolios and have played an important role in providing potential growth to a portfolio comprised of stocks, bonds, and alternatives. What we have seen over the previous 20 years is that Large-Cap companies have been a primary driver of a portfolio’s returns. The S&P 500 Index, which is representative of Large-Cap companies, has outperformed the Small-Cap stocks, International stocks, and Investment Grade Bonds.  Specifically in Large-Cap, Large-Cap Growth stocks have shown strong performance during this period and have outperformed the broader Large-Cap group. ¹

Invesco QQQ ETF (QQQ) assets represent 27% of all assets in US Large-Cap Growth ETFs.² There are many reasons investors may have chosen QQQ to represent their Large-Cap and Large-Cap Growth exposure. The companies within the Nasdaq-100 Index, Invesco QQQ’s underlying index, have shown higher levels of historic growth rates of fundamental metrics such as revenue, earnings, and dividends when compared to the S&P 500 and Russell 1000 Growth.

QQQ Standardized Performance. Performance data quoted represents past performance, which is not a guarantee of future results. An investor cannot invest directly in an index. Index returns do not represent Fund returns.

We believe the higher growth rates of these fundamental metrics has fueled Invesco QQQ’s outperformance against industry benchmarks such as the S&P 500 and Russell 1000 Growth indexes.³

We have seen some of the leaders in the Nasdaq-100 grow into the leaders in the overall market. While companies like Apple, Meta Platforms (formerly Facebook), Amazon and Google have had a large presence in QQQ, they have also become some of the largest companies in the S&P 500. Through recent years, the S&P 500 has started to look more like QQQ as we now see overlapping holdings’ aggregate market capitalization comprise 39% of the S&P 500’s market cap.⁴ Only 10 years ago, this number was at 20% and illustrates the influence QQQ holdings may have had on the broader market. Some of the companies that are in both QQQ and the S&P 500 have risen to the top of their industries and have become some of the most successful and well-recognized companies in the world.⁵

Performance data quoted represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than performance quoted. Invesco QQQ’s total expense ratio is 0.20%.

Large-Cap Growth can be an important part of a diversified portfolio. QQQ has continued to be one of the leaders in this category and has given investors access to innovative companies that have grown revenue, earnings and dividends at a faster rate than the broader market (S&P 500). For investors looking for exposure within the large-cap growth segment of the market, Invesco QQQ should be considered.