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The S&P 500 (SNPINDEX: ^GSPC) is the most closely watched barometer of how the overall stock market is performing. There's good reason for this, as the benchmark contains the 500 largest U.S. businesses. Its performance has been impressive, with a total return of 237% in the past decade.
But investors can do better. There's one booming investment vehicle that has significantly outperformed the S&P 500 in the trailing-10-year period. Here's why it's the smartest technology-focused exchange-traded fund (ETF) to buy with $100 right now.
Betting on innovation
The Invesco QQQ Trust (NASDAQ: QQQ) deserves a much closer look. It contains the 100 biggest nonfinancial companies that trade on the Nasdaq stock exchange. As of Feb. 26, this ETF had $324 billion in assets.
Certain areas of the economy have a heavy influence on the QQQ. Indeed, 59% of the fund is represented by the technology sector, while another 20% comes from the consumer discretionary sector.
The "Magnificent Seven" stocks have a huge weighting. Combined, they make up 43% of QQQ's entire asset base. In other words, the performance of these seven businesses has a meaningful impact on the ETF.
This has been a good thing in the recent past. Investors craving growth potential certainly aren't complaining. These companies are well-positioned to benefit from some powerful secular trends, like e-commerce, streaming entertainment, cloud computing, digital payments, and digital advertising, for example. It seems these tech shifts still have a long way to go.
I think the beauty of owning the QQQ is that you don't need to identify a single winner. Everyone is talking about artificial intelligence (AI), and for good reason. This revolutionary technology is likely going to become a more important part of our lives in the future. By putting money to work in QQQ, investors gain exposure to the AI trend more broadly, reducing individual stock risk.
An impressive track record
In the past decade, a $10,000 investment in the Invesco QQQ Trust would have turned into more than $51,000 today. That translates to a marvelous 17.8% annualized return, which crushes what the S&P 500 was able to achieve. It's hard for investors to argue with this kind of impressive performance.
It doesn't cost much, either. The expense ratio of 0.20% means that of the hypothetical $10,000 investment, only $20 would go toward the fee. At the end of the day, this means you keep more of your hard-earned savings over time, which is a winning outcome.