If investors want broad access to the stock market in their portfolios, they usually direct their attention to the S&P 500 (SNPINDEX: ^GSPC). The popular benchmark is a gauge to measure the performance of U.S. equities at large. And in the past decade, it has generated a total return of 213% (as of April 28). Not too shabby.
But what if you want greater exposure to a particular industry or theme, such as technology? There are specific exchange-traded funds (ETFs) for that. In fact, one booming ETF has crushed the S&P 500 in the last 10 years.
Here's a look at the best tech ETF to invest $2,000 in right now.
Betting on powerful secular trends
The internet has and will continue to shape our economy and society. With this in mind, it makes sense why investors might want to skew their portfolios more to technology businesses.
Instead of the S&P 500, it's time to learn more about the Invesco QQQ Trust (NASDAQ: QQQ). This ETF tracks the performance of the Nasdaq-100, which consists of the largest 100 nonfinancial companies that trade on the namesake stock exchange.
The top 10 stocks represent a sizable 49% of the portfolio. Unsurprisingly, the "Magnificent Seven" stocks have a monumental impact on the ETF's performance. So, if investors aren't bullish on these businesses and the trends that power them, like digital advertising, digital payments, cloud computing, electric vehicles, and artificial intelligence (AI), then it might be a good idea to think twice.
However, if you're optimistic about these tailwinds looking toward the future, the Invesco QQQ Trust is a smart choice. The added benefit is that there's instant diversification, eliminating the need to successfully pick individual stocks.
The Invesco QQQ Trust currently has $298 billion in assets under management. This figure is worth pointing out because it highlights the huge scale of the ETF, showcasing how much capital believes in this strategy. In other words, investors aren't wasting time considering an esoteric fund that has minimal assets or public interest.
Strong returns at a low price
Had you invested $2,000 in the Invesco QQQ Trust exactly 10 years ago, you'd have nearly $9,300 today. This translates to a wonderful 16.6% annualized gain. Ongoing success of the tech sector overall, which is becoming a more pronounced driver of economic growth, certainly had an impact on the return profile of this ETF.
For such an impressive gain, you'd be forgiven for assuming that the fees would be very high. This couldn't be further from the truth.
The Invesco QQQ Trust carries just a 0.2% expense ratio. That hypothetical $2,000 invest would only see $4 go to fees on a yearly basis. This means you get to keep more of your money over time instead of seeing it drained from your account.
What can investors expect?
While the Invesco QQQ Trust's past performance is exceptional, investors shouldn't necessarily expect similar gains in the future. Of course, it could happen. But it's a good idea to set the right expectations.
What investors should really care about is putting money to work now, especially because the Invesco QQQ Trust is trading 12% below its all-time record. There are worries that President Trump's radical trade policies will lead to economic turmoil in the not-too-distant future. And this has investors taking a cautious approach.
But the stock market has always recovered from bear markets and corrections to ultimately reach new highs. Choosing to invest $2,000 right now in the Invesco QQQ Trust will likely prove to be a very lucrative move for your portfolio.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
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Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
