Debunking three myths about QQQ
Invesco QQQ
Invesco QQQ ETF tracks the Nasdaq-100 Index — giving you access to the performance of the 100 largest non-financial companies listed on the Nasdaq. The fund and the index are rebalanced quarterly and reconstituted annually.
Even some of the world’s best-known companies face misconceptions about exactly what they do. Take Microsoft, for example—while many still associate it primarily with its Windows operating system, the company has significantly diversified. Today, it generates substantial revenue from its cloud computing platform, Azure, enterprise software solutions, and even gaming through its Xbox division. Similarly, Amazon might be thought of as just an online retailer, but its cloud computing arm, AWS, has become a major profit driver, helping cement Amazon’s critical role in the global tech infrastructure.
Invesco QQQ ETF, which tracks the Nasdaq-100® Index, is no different—it’s also subject to its own set of misconceptions. As one of the most innovative and widely traded ETFs, it’s critical to debunk these myths to provide investors with a clearer understanding of its composition and performance.
Myth #1: QQQ is just a tech fund
It’s true that QQQ has significant exposure to technology companies, but labeling it purely as a “tech fund” is misleading. As of December 31, 2024, approximately 40% of QQQ’s portfolio was allocated to non-tech sectors such as consumer discretionary, healthcare, industrials, telecommunications, and consumer staples. Notable holdings include Costco, Amgen, Honeywell, and PepsiCo. This diversification reflects the broader innovation occurring across industries beyond technology.
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A look at some of QQQ’s non-tech sectors and associated top holdings
| Consumer discretionary | Healthcare | Industrials | Telecommunications | Consumer staples | |||||
| Costco | Starbucks | Amgen | Vertex | Honeywell | Paypal | Comcast | T-Mobile | Kraft Heinz | PepsiCo |
Myth #2: QQQ holds all Nasdaq-listed companies
Another common misconception related to QQQ is that it provides comprehensive exposure to the stocks listed on the Nasdaq Stock Exchange. In fact, QQQ tracks the Nasdaq-100 Index, a benchmark of the 100 largest non-financial companies listed on the Nasdaq. In other words, QQQ does not provide exposure to the Nasdaq Composite Index, which held 3,2973 securities* as of December 31, 2024, according to Nasdaq Global Indexes.
The ease of having access to the 100 largest non-financial Nasdaq-listed stocks may be appealing to some investors, while also providing exposure to some of the world’s best-known and innovative companies.
Large-cap Nasdaq-100 companies also tend to be highly traded, which contributes to QQQ’s liquidity. QQQ, as the second most traded ETF based on average daily volume traded within the U.S., has long been considered one of the most liquid ETFs available to investors as of December 31, 2024.1
Myth #3: It’s easy to beat QQQ by picking stocks
QQQ has delivered solid long-term performance with a 15-year annualized net asset value (NAV) return of 18.50%.2 It may be tempting for investors to think they could do better by simply picking the best stocks in the Nasdaq-100 Index. Sounds easy, right? Well, it turns out it’s not.
Standardized performance. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.
As of December 31, 2025, the fund had an overall rating of 5 Stars out of 1105 funds, 4 Stars out of 1004 funds for the 3-year period, 4 Stars out of 936 funds for the 5-year period and 5 Stars out of 755 funds for the 10-year period, respectively, in the Large Growth category.
Source: Morningstar Inc. Morningstar rankings are based on total return, excluding sales charges and including fees and expenses versus all funds in the Morningstar category. Open-end mutual funds and exchange-traded funds are considered a single population for comparison purposes. Had fees not been waived and/or expenses reimbursed currently or in the past, the ranking would have been lower. The Morningstar one-year rank 16% (129 of 1080), three-year rank 18% (134 of 1004), five-year rank 15% (91 of 936), 10-year rank 4% (20 of 755) as of December 31, 2025.
Setting the record straight
Invesco QQQ offers investors a way to gain diversified exposure to some of the most innovative companies in the world. By dispelling these myths, investors can better understand how QQQ could fit into a broader investment strategy. Whether an investor is seeking long-term growth potential or sector-leading innovation, QQQ continues to stand out as an attractive option.
Key takeaways:
- Technology is Invesco QQQ’s largest sector, but the ETF also provides exposure to other areas of the economy such as healthcare and industrials.3
- QQQ tracks the Nasdaq-100 Index, a simple yet powerful approach that also helps boost the ETF’s liquidity.
- Over the past 10 years, QQQ has become one of the best performing large-cap growth funds.
Footnotes
1
Bloomberg L.P., in the U.S. based on average daily volume traded, as of December 31, 2024.
2
Bloomberg L.P., as of December 31, 2024. Past performance is not a guarantee of future results.
3
The technology sector makes up 59.49% of Invesco QQQ ETF. Source: Bloomberg LP as of December 31, 2024.
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Past performance is not a guarantee of future results.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional/financial consultant before making any investment decisions.
The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund’s return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.
Investments focused in a particular sector, such as technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
The Nasdaq-100® Index is a stock market index made up of equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. Investment cannot be made directly into an index.
The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange.
The Index and Fund use the Industry Classification Benchmark (“ICB”) classification system which is composed of 11 economic industries: basic materials, consumer discretionary, consumer staples, energy, financials, health care, industrials, real estate, technology, telecommunications and utilities.
Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, typically consisting of 50,000 Shares.
This content should not be construed as an endorsement for or recommendation to invest in any of the QQQ holdings. None of the companies mentioned herein are affiliated with Invesco. Only 10 of 101 underlying Invesco QQQ ETF fund holdings are featured. The holdings are meant to help illustrate representative innovative themes, not serve as a recommendation of individual securities. Holdings are subject to change and are not buy/sell recommendations. See invesco.com/qqq for current holdings. As of 2/3/2025, Costco Wholesale Corp, Starbucks Corp, Amgen Inc, Vertex, Honeywell International Inc, PayPal Holdings Inc, Comcast Corp, T-Mobile US Inc, The Kraft Heinz Co, and PepsiCo Inc made up 2.10%, 0.51%, 0.94%, 0.58%, 0.66%, 0.33%, 0.53%, 1.24%, 0.15%, 1.02%, respectively, of Invesco QQQ ETF.
Not a Deposit | Not FDIC Insured | Not Guaranteed by the Bank | May Lose Value | Not Insured by any Federal Government Agency
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund’s return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.
The Fund is non-diversified and may experience greater volatility than a more diversified investment.
The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues
Investments focused in a particular sector, such as technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
The sponsor of the Invesco QQQ TrustSM is Invesco Capital Management LLC (Invesco). NASDAQ, Nasdaq-100 Index, Nasdaq-100 Index Tracking Stock and QQQ are trade/service marks of The Nasdaq Stock Market, Inc. and have been licensed for use by Invesco, QQQ’s sponsor. NASDAQ makes no representation regarding the advisability of investing in QQQ and makes no warranty and bears no liability with respect to QQQ, the Nasdaq-100 Index, its use or any data included therein.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their financial professional for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Invesco is not affiliated with SRL Global.
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