This year could be a busy one for IPOs. Many top companies may go public, including SpaceX, OpenAI, and Anthropic. While it may be tempting to invest in each of them individually, there is an even easier option to consider, and that’s investing in an exchange-traded fund (ETF) that may give you exposure to all of them.
With an ETF, you can also spread out your risk so that you are not highly vulnerable to how one single stock does. That will limit your gains, but it can also drastically reduce your risk in the event that a stock doesn’t do too well out of the gate.
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Due to recent rule changes at the Nasdaq, there’s one ETF that can be an ideal one to hold if you want exposure to the hottest new issues, and that’s the Invesco QQQ Trust (NASDAQ: QQQ).
The Invesco QQQ ETF tracks the Nasdaq-100 index, which is a collection of the top non-financial stocks on the Nasdaq. It’s a great way to gain exposure to the biggest and brightest growth stocks on the exchange, which is why the ETF is one of the most popular ones for retail investors to own.
Recent rules changes could make it even more popular. As of May 1, the Nasdaq-100 will be able to include large stocks as quickly as 15 days after their IPOs. Up until now, investors have had to wait far longer (a year or more). Looser restrictions for the index make investing in the QQQ Trust a more attractive option for growth investors who want to invest in the newest IPOs.
Investing in growth stocks can result in far better returns for investors in the long run than going with dividend stocks or safer investments. While there is often more volatility with growth stocks, the payoff can be considerable when looking at the big picture. The Invesco QQQ Trust has risen by a staggering 460% over the past decade, versus 230% gains for the S&P 500. There have been corrections and crashes along the way, but remaining invested in the ETF has resulted in terrific returns for long-term investors.
Now, with the ETF also including new issues that have the potential to soar right out of the gate when they go public, there’s the possibility for it to generate even better returns for investors. With the new rule changes, the Invesco QQQ Trust can be a no-brainer buy if you’re planning to hold on for the long haul.
