February 6, 2025 | Partner Content

How ETFs — including Invesco QQQ — have democratized investing

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.

Key takeaways

Exchange-traded funds (ETFs) have helped level the playing field for individual investors by giving them access to institutional-caliber investment tools.
ETFs have evolved from tradeable equity index funds to cover a range of asset classes, niches, and active strategies.
Invesco QQQ was one of the earliest ETFs and has provided exposure to some of the world’s most innovative companies for over 25 years.

ETFs burst onto the scene about 30 years ago and the investing landscape hasn’t been the same since. At a fundamental level, ETFs transformed the market by leveling the playing field, giving individual investors access to global markets with the fees and precision once reserved for only the largest institutional investors.

Today, ETF investors trade billions of shares on global exchanges every day across a broad range of asset classes. In fact, assets in US-listed ETFs recently hit the $10 trillion milestone, a testament to their popularity with investors and financial professionals.¹ As one of the earliest and largest ETFs, Invesco QQQ has played a crucial role in shaping the overall ETF market for multiple generations of investors.

ETFs: From 30 to 3,000 in under three decades

The first US ETF was launched in 1993 and QQQ followed a few years later in 1999 to quickly become one of the largest and most highly traded ETFs. Assets in QQQ — which tracks the Nasdaq-100 Index and features Apple, Amazon, Nvidia and other industry leaders — have grown to more than $300 billion.²

When QQQ first launched in 1999, there were only 30 ETFs listed in the US, with total assets across all ETFs amounting to about $34 billion.³ Fast forward to today and there are over 3,700 US-listed ETFs,⁴ with over $10 trillion of assets. ETFs have been around in the US for three decades, and their assets have doubled over every rolling five-year period during that timeframe.⁵

The seed of that remarkable growth was a simple yet powerful idea: What if a new type of security could be created that combined elements of individual stocks and index funds? The result was exchange-traded portfolios based on popular benchmarks such as the S&P 500 and Nasdaq-100 Index.

Investors and financial professionals like ETFs for their:

Lower costs: ETFs often have cheaper expense ratios than comparable mutual funds due to potentially lower administrative costs.⁶
Liquidity and flexibility: ETFs can be bought and sold during the trading day.
Transparency: Most ETFs disclose their full holdings daily.
Tax efficiency: The process of ETF creation and redemption may help limit capital gains distributions and taxable events.

Today, investors can use ETFs to invest in a variety of asset classes, including stocks, bonds, commodities, currencies and alternatives. They can choose from actively managed strategies, as well as specialized ETFs in areas such as cybersecurity and the blockchain ecosystem (the code on which cryptocurrencies are built). In other words, ETFs have helped democratize investing because they’ve put institutional-caliber tools in the hands of all investors.

QQQ: You’ve come a long way

QQQ has helped investors by striving to provide low-cost, liquid, tax-efficient and transparent exposure to companies that are at the forefront of transformative, long-term themes.⁷ Since its inception in 1999, QQQ’s Net Asset Value (NAV) has delivered a cumulative return of 1,025,24%, outperforming the broad US market, as measured by the S&P 500 Index, which posted a cumulative return of 619.33%.⁸

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.

The Nasdaq-100® Index, which QQQ tracks, has seen individual stocks come and go, but one thing that’s remained constant for investors is the ability to gain exposure to some of the world’s most innovative companies in one fund. Some of the largest names in QQQ weren’t even around when the ETF launched in 1999, including Tesla and Facebook (Meta Platforms).

It’s also interesting to look at how some of QQQ’s largest companies have evolved and innovated over the years.

QQQ: Different products, same innovative companies

QQQ holding	1999 product	Today
Apple	iMac desktop computer	Vision Pro
Microsoft	Windows 99	Azure
Alphabet (Google)	Google AdWords platform	YouTube TV
Amazon.com	Online bookstore	Amazon Web Services
Nvidia	GeForce 256	Blackwell

The best may be yet to come

Although ETFs have been around for over 30 years, they could still be in the relatively early innings as more investors and financial professionals discover their benefits and flexibility. We believe QQQ will be a key engine of that growth as the economy and technology continue to evolve and investors look for ways to incorporate innovation into their portfolios.

Footnotes

“Another Month, Another Milestone: 10 Reasons the ETF Market Reached $10 Trillion in Q3,” Morningstar.com, October 3, 2024.

Invesco, as of November 21, 2024.

“2022 Investment Company Fact Book,” Investment Company Institute (ICI).

ETFGI, as of October 31, 2024.

ETFGI, as of March 31, 2023.

As with any comparisons, Financial Professionals should be aware of the material differences between Mutual Funds and ETFs. Most ETFs are passively managed, whereas most mutual funds are actively managed. Other differences include, but are not limited to, expenses, management style and liquidity. Financial professionals should make their investors aware of these differences before investing.

Since ordinary brokerage commissions apply for each buy and sell transaction, frequent trading activity may increase the cost of ETFs.

Morningstar Direct. Cumulative outperformance is 405.91% as of September 30, 2024. Fund performance shown at NAV. Data is as of Invesco QQQ ETF inception date of March 10, 1999. Invesco QQQ’s total expense ratio is 0.20%. 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.

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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.

Companies engaged in the development, enablement and acquisition of blockchain technologies are subject to a number of risks. Blockchain technology is new and many of its uses may be untested. There is no assurance that widespread adoption will occur.

This information is provided for informational purposes and does not constitute an endorsement or recommendation of any companies referenced.

This content should not be construed as an endorsement for or recommendation to invest in Amazon, NVIDIA, Apple, Microsoft, or Alphabet. Neither Amazon, NVIDIA, Apple, Microsoft, nor Alphabet are affiliated with Invesco. Only 5 of 101 underlying Invesco QQQ ETF fund holdings are featured. The companies referenced 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 12/11, Apple, Microsoft, Alphabet, Amazon.com, and Nvidia made up 8.75%, 7.79%, 5.23%, 5.64%, and 7.98%, respectively, of Invesco QQQ ETF.