chip manufacturer Nvidia (NASDAQ:NVDA) is one of the hottest growth stocks on the market, with its stock price more than tripling in the past year alone. However, the hedge fund billionaire listed below sold his Nvidia position during the fourth quarter and reallocated some of the capital to his two high-growth index funds. Invesco QQQ Trust (NASDAQ:QQQ) And that iShares US Technology ETF (NYSEMKT:IYW).
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Millennium Management's Israel Englander sold 1.7 million Nvidia shares in the fourth quarter, reducing his holdings by 45%. At the same time, he increased his position in Invesco QQQ Trust by 53% and started a new position in the iShares US Technology ETF.
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John Overdeck and David Siegel of Two Sigma Investments sold 30,663 shares of Nvidia stock in the 4th quarter, reducing their holdings by 5%. Meanwhile, the companies have increased his position in Invesco QQQ Trust by 75% and now ranks as his second-largest holding in Two Sigma. Additionally, its stake in the iShares US Technology ETF increased by 214%.
These index funds are particularly attractive because they have outperformed the S&P 500 over the past decade. Specifically, the S&P 500 rose 228% during this period, while the Invesco QQQ Trust returned 440% and the iShares US Technology ETF soared 528%.
Here's what investors need to know about these index funds.
1. Invesco QQQ Trust
The Invesco QQQ Trust measures the performance of the Nasdaq 100, which tracks the top 100 companies on the Nasdaq Stock Exchange. Index funds focus on the information technology (58.9%) and consumer discretionary sectors (17.9%), the only two market sectors that have outperformed the S&P 500 over the past decade.
Invesco QQQ Trust's 10 largest positions are detailed below by weight.
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Microsoft: 8.6%
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apple: 7.8%
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NVIDIA: 6.2%
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alphabet: 5.6%
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Amazon: 5.6%
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Metaplatform: 4.5%
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Broadcom: 4.3%
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Tesla: 2.5%
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Costco wholesale: 2.4%
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Netflix: 1.8%
As mentioned earlier, Invesco QQQ Trust's return was 440% over the past 10 years, but its outperformance goes back even further. Over the past 20 years, the index has returned 1,370%, compounding at an annual rate of 14.3%. $100 invested weekly at this pace (approximately $434 per month) would be worth $587,500. By comparison, investing the same amount in an S&P 500 index fund would be worth $333,100.
The price of that outperformance was volatility. His 3-year beta value for Invesco QQQ Trust is 1.19. This means that for every 100 basis point change in the S&P 500 index, the index fund moved 119 basis points (1.19 percentage points). Remember that volatility goes both ways. This can lead to significant outperformance when stock prices are rising, but it can lead to significant underperformance when stock prices are falling.
The last item to note is the expense ratio. Invesco QQQ Trust has a relatively low expense ratio of 0.2%, meaning that every $10,000 invested will cost you a total of $20 in annual interest. This makes this index fund a very attractive option for investors accustomed to volatility.
2. iShares US Technology ETF
The iShares US Technology ETF measures the performance of 131 stocks in the Information Technology sector, allowing investors to diversify across the consumer electronics, semiconductor, and software markets. Index funds are rebalanced quarterly to ensure that (1) no single position weighs more than 22.5% and (2) no positions weighing more than 4.5% total more than 45% of the fund. Masu.
The 10 largest positions in the iShares US Technology ETF are listed below in order of weight.
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Microsoft: 18.1%
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apple: 15.5%
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NVIDIA: 12.6%
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alphabet: 5.9%
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Metaplatform: 3.6%
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Broadcom: 2.9%
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Salesforce: 2.4%
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Adobe: 2.1%
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Advanced Micro Devices: 1.9%
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Qualcomm: 1.9%
The iShares US Technology ETF has consistently outperformed the S&P 500. I already mentioned that he has outperformed the market over the past 10 years, but his index fund returns have also reached 1,240% over the past 20 years, giving him 13.8% compounded annually. If you invested $100 each week at this pace, you'd be worth $547,900. Investing the same amount in an S&P 500 index fund would be worth $333,100.
As with the Invesco QQQ Trust, the price of its outperformance was volatility. The iShares US Technology ETF has a three-year beta of 1.24, which means that it moves 124 basis points for every 100 basis points that the S&P 500 index moves. Even more concerning is that the iShares US Technology ETF has a fairly high expense ratio of 0.4%. . For comparison, the average expense ratio for US ETFs was 0.37% in 2022. Lucifer.
Personally, I like the idea of having direct exposure to the high-growth information technology sector; Vanguard Information Technology ETF (NYSEMKT: VGT). Not only has his performance improved slightly over the past 20 years, with an annual compound interest rate of 14.1%, but he also has a much lower expense ratio of 0.1%.
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Trevor Jennewine has worked at Adobe, Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Adobe, Advanced Micro Devices, Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, Qualcomm, Salesforce, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: His long January 2026 $395 call on Microsoft and his short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
“Billionaires are selling Nvidia stock and buying two top index funds that have outperformed the S&P 500 in the past decade” was originally published by The Motley Fool
