The pullback in the prices of tech stocks provides a solid buying opportunity. But with most tech stocks losing substantial value, it is tough to pick the right one. This is where ETFs (Exchange-Traded funds) come in handy. There are some excellent sector-focused ETFs that can give you exposure to high-growth tech stocks and reduce the overall risk, thanks to diversification. Among tech-focused ETFs, investors could consider investing in the Invesco QQQ Trust (QQQ).
Why Invest in QQQ?
The Invesco QQQ tracks the Nasdaq-100 index (NDX), implying that investors can get exposure to the largest technology stocks by investing in this ETF. With the help of the TipRanks’ Stock Comparison tool, here is a summary of the top 5 holdings of QQQ as of February 1.
By sector, information technology accounts for 49.7% of the total holdings. Meanwhile, communication services account for 16.46%.
What’s attractive is that this ETF has beaten the S&P 500 Index (SPX) in nine out of the last 10 years. Notably, an investment of $10,000 in Invesco QQQ has turned into $48,359 in the last 10 years (as of January 31, 2023). The S&P 500 Index turned the same amount into $32,996.
QQQ has a low expense ratio of 0.20% (cost of managing the ETF). Moreover, it has a P/E (price-to-earnings) ratio of 21.29, which is attractive given the recent pullback.
Is Invesco QQQ a Good Long-Term Investment?
On TipRanks, the Invesco QQQ ETF has an Outperform Smart Score of eight, implying it is more likely to beat the broader market averages.
Furthermore, TipRanks’ data shows that all five of the top holdings (accounting for 37.93% of the total holdings) of QQQ have an Outperform Smart Score of at least eight on 10. Note: Shares with a “Perfect 10” Smart Score have historically outperformed the benchmark index.
Overall, the Invesco QQQ ETF is a smart way to gain exposure to the big tech stocks and reduce the overall risk.