This ETF Made Index Investing Cool Again -- And Made Shareholders Big Winners

2 hours ago 2

Dan Caplinger, The Motley Fool

Thu, March 5, 2026 astatine 11:22 AM CST 4 min read

Exchange-traded funds entreaty to investors who similar to support things simple. Rather than doing probe connected countless idiosyncratic stocks successful the anticipation of uncovering capable promising prospects to make a well-diversified portfolio of 25 picks oregon more, the close ETF tin springiness you instant diversification that's tailored to your peculiar investing strategy. And with thousands of antithetic ETFs presently connected the market, there's a money that's apt to lucifer up good with your wishes.

Yet arsenic with everything successful the fiscal world, the astir palmy ETFs person struck a chord with investors. As we discussed successful our three-part bid connected the SPDR S&P 500 ETF Trust ETF (NYSEMKT: SPY) for the Voyager Portfolio, novelty is an important diagnostic tin gully investors' attention. But there's lone truthful overmuch country for ETFs that way the S&P 500. One ETF that proved that you could really outperform the S&P 500 utilizing an scale investing attack was a game-changer for galore investors. Here, you'll larn much astir the Invesco QQQ Trust (NASDAQ: QQQ) and wherefore it has go immensely popular.

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The strategy that the Invesco QQQ Trust follows is so rather simple. It aims to way the Nasdaq 100 Index, which is composed of the 100 largest companies by marketplace capitalization that commercialized connected the Nasdaq Stock Market and that aren't successful the fiscal sector. The stocks successful the Nasdaq 100 are weighted by marketplace capitalization, truthful the largest stocks connected the Nasdaq person much wealth allocated to them successful the QQQ Trust than the smaller stocks do.

It would beryllium hard to ideate a worse commencement to an exchange-traded money than the 1 the Invesco QQQ Trust had to woody with. The ETF launched successful 1999, erstwhile exertion stocks were adjacent to hitting their highs. Even today, the Nasdaq has a pronounced thin toward the tech sector, but astatine the time, that accent was adjacent much profound. Most tech IPOs came nationalist connected the Nasdaq, not due to the fact that they didn't suffice to beryllium listed connected the New York Stock Exchange but alternatively due to the fact that they wanted the estimation that came from being Nasdaq-listed.

So erstwhile the tech bust led to the crushing carnivore marketplace of 2000 to 2002, shares of the QQQ Trust were afloat exposed. The driblet yet amounted to much than 80%, arsenic adjacent behemoths similar Microsoft (NASDAQ: MSFT), Cisco Systems (NASDAQ: CSCO), and Intel (NASDAQ: INTC) weren't immune from the downturn.

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