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When mentioning the stock market's performance, the investment community usually focuses on the S&P 500 index. This broad index contains 500 large and profitable U.S. businesses. In the past decade, it has generated a total return of 236%, which is an impressive feat.
But perhaps you're interested in the potential to produce even better returns. This might guide you to wanting greater exposure to companies with a tech focus. Luckily, there's an investment vehicle that has significantly outperformed the S&P 500.
Continue reading to learn about the best technology exchange-traded fund (ETF) to invest $500 in right now.
Specialized exposure
It's time to get familiar with the Invesco QQQ Trust (NASDAQ: QQQ). As of March 26, it had $311 billion in total assets. And it's invested in the 100 biggest nonfinancial companies that trade on the Nasdaq exchange.
If you want to own disruptive and innovative businesses, then this ETF might be the right choice for you. It has a high concentration in the "Magnificent Seven," with this group combining to represent 42% of the QQQ's asset base. These companies have generally exhibited rapid growth in recent years. What's more, they benefit from some major themes, such as artificial intelligence, digital advertising, digital payments, cloud computing, and streaming entertainment, for example.
Technology continues to change at a rapid pace as it shapes our economy. Consequently, it can be difficult to identify single winners within various secular trends. This highlights the beauty of the Invesco QQQ Trust. By owning 100 different stocks, investors benefit from broad diversification, a surefire way to capture the most successful enterprises of tomorrow while avoiding single-stock risk.
What really matters
It's certainly important to know what stocks and industries are represented in an ETF. However, investors care most about performance. The QQQ hasn't disappointed in this regard.
In the past 10 years, it has generated a total of 406%. This means a $500 investment made in late March 2015 would be worth over $2,500 today. This is an incredible outcome that drastically outperformed the S&P 500's total return of 236%. Of course, the caveat is that investors had to endure greater volatility along the way.
Besides a fantastic gain, it's also worth paying attention to the costs. The QQQ carries an expense ratio of 0.2%. On a $500 capital outlay, this translates to $1 in fees. Instead of fattening the pockets of the ETF sponsor, more of your hard-earned savings are kept over time.