Consider Investing in the Invesco Nasdaq 100 ETF (QQQM)
The Invesco Nasdaq 100 ETF (QQQM) has seen a solid year, with a 12.7% increase year-to-date through July 23. However, it recently experienced a dip of over 7% from its June peak. This could be a favorable time to invest, as a 7% discount can be appealing for potential investors.
Why Invest Now?
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Timing the Market is Risky: Holding off on investing in anticipation of further declines may backfire. Market fluctuations can lead to missed opportunities for gains. The adage “time in the market beats timing the market” holds true.
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Historical Performance: Despite occasional downturns, the Nasdaq-100 has delivered robust long-term returns. While past performance isn’t a guarantee, historical trends favor a potential recovery.
Tech Exposure in QQQM
Tech stocks represent 68.5% of QQQM, making it a strong option as they regain investor sentiment. The ETF’s significant holdings include:
- Nvidia: 8.06%
- Apple: 7.73%
- Micron Technology: 4.85%
- Microsoft: 4.74%
- Amazon: 4.28%
Market Dynamics
Currently, interest in stocks like Microsoft’s, Amazon’s, Meta’s, and Tesla’s is waning, while smaller industries such as memory and storage hardware are thriving. Micron and AMD, for instance, have seen significant year-to-date growth.
As investors seek “stability,” major tech companies could become attractive once again, enhancing QQQM’s growth potential, given its heavy weighting in these stocks.
Conclusion
Investing in QQQM could prove beneficial, with long-term prospects looking favorable. While nothing is ever guaranteed in the stock market, the current risk-reward scenario appears to be in the investors’ favor.
Stefon Walters holds positions in Apple and Microsoft. The Motley Fool recommends multiple tech stocks, including AMD and Nvidia.
