Is Invesco QQQ Trust a Millionaire-Maker?

The S&P 500 deservedly gets a lot of attention from the investment community, as it includes 500 of the largest and most profitable companies based in the U.S. But it's the Invesco QQQ Trust (NASDAQ: QQQ) that has performed significantly better for investors.

This exchange-traded fund (ETF) needs to be on your radar, particularly if you're trying to supercharge your investment returns. Is the Invesco QQQ Trust a millionaire-maker, though?

Exposure to innovation

The Invesco QQQ Trust tracks the performance of 100 of the biggest non-financial companies that trade on the Nasdaq stock exchange. This group is called the Nasdaq 100 Index .

A notable 51% of the fund's holdings fall into the information technology sector, with almost 16% in the communication services sector. The so-called " Magnificent Seven " stocks have a huge weighting in the Invesco QQQ Trust. Combined, they make up a whopping 42% of the entire portfolio.

In recent times, that has helped with the ETF's returns, as these stocks have done remarkably well. Businesses in that group of seven benefit from a multitude of tech-driven secular trends, such as cloud computing, digital advertising, electric vehicles, digital payments, streaming entertainment, and e-commerce.

For the individual investor, owning the Invesco QQQ Trust means one does not need to have the time or financial analysis skills to pick individual stocks.

Low cost, high performance

Investors certainly must understand the composition of the ETF before they consider buying. But it's also important to know what they'd be paying. Fortunately, the Invesco QQQ Trust is not expensive at all. The expense ratio of 0.2% means that for every $10,000 invested, only $20 goes toward fees. That's extremely compelling.

In the past few years, Cathie Wood of Ark Invest has gotten a lot of attention. Her firm focuses on investing in tech-forward, disruptive businesses benefiting from powerful secular trends. Sounds like the Invesco QQQ Trust, doesn't it?

However, Ark Invest charges a 0.75% expense ratio for its flagship fund, the Ark Innovation ETF . That's nearly four times as expensive as the Invesco QQQ Trust. Paying that steep a fee hasn't been worth it, as the Ark Innovation ETF has returned a disappointing 10% in the past five years.

During that same period of time, the Invesco QQQ Trust put up an impressive total return of 173%. This means a $10,000 investment made in August 2019 would be worth more than $27,000 today. That's not too shabby for a completely passive investment vehicle that requires no effort on the part of its owners.

On the way to $1 million

After a volatile past few weeks, the QQQ trades just 5% off its all-time high from July. Even as the ETF is near record territory, it might still be a good time to invest. What matters more than anything else is being in it for the long term, not trying to time the market and successfully buy the dips and sell at the peaks. Moving in and out of equities is a losing proposition as it can end up causing more damage to your portfolio.

Had you invested $91,000 in the Invesco QQQ Trust at its inception date in 1999, you'd have a million-dollar portfolio balance today. I have no idea what the future will hold, but I think it's right to expect returns to roughly mimic that historical 10% annual average going forward.

However, if you're able to invest more capital up front, while still having a long time horizon, the Invesco QQQ Trust could one day make you a millionaire in a relatively reasonable time frame.

Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .