The Invesco QQQ ETF (QQQ) has been a top-performing fund in recent decades, with a remarkable increase from $17.64 in 2002 to over $480 today, representing a 2,885% growth. With assets totaling over $292 billion, it is among the largest funds globally.
The QQQ ETF tracks the Nasdaq 100 index, which comprises the 100 largest companies in the technology sector. Key constituents include Microsoft, Apple, Nvidia, Meta Platforms, and Netflix. If you appreciate the QQQ ETF, you may also find the iShares US Technology ETF (IYW) appealing, with assets exceeding $19.2 billion.
Unlike QQQ, IYW tracks the Russell 1000 Technology RIC Index, consisting of 140 technology companies with quarterly dividend distributions. The fund’s major segments include software and services, semiconductors, technology hardware, media, entertainment, and professional services. The top ten companies in the IYW fund constitute around 67% of the total, compared to 50% in the QQQ ETF.
In recent years, IYW has outperformed QQQ, showcasing growth rates higher than its counterpart. For instance, in 2023, IYW saw a 65.5% increase, surpassing QQQ’s 54% growth. Similarly, in 2019, IYW rose by 48% while QQQ climbed 38%. Over the past five years, IYW has delivered total returns of 211% compared to QQQ’s 164% rise.
The future outlook for IYW appears promising, backed by its strong performance and concentration in leading technology companies. Analysts anticipate continued growth in tech earnings as the global economy recovers, along with potential interest rate cuts by the Fed. However, investors should be cautious of concentration risks in IYW, particularly concerning potential pullbacks in companies like Nvidia, given the cyclical nature of the semiconductor industry.