Over the last decade, the tech-heavy Nasdaq index has outperformed the S&P 500 by a large margin. If there’s one way to take exposure in the entire basket of the Nasdaq 100 index, it is the exchange-traded fund (ETF) called Invesco QQQ Trust. Invesco QQQ — the ETF that tracks the Nasdaq-100 index — has beaten the S&P 500 nine out of the last 10 years.

Invesco QQQ listed on the Nasdaq stock exchange is a low-cost option to purchase the bucket of stocks in the Nasdaq index via the ETF route. Over the last 1-year, the QQQ has clocked over 50% ( March 13) matching almost what Nasdaq 100 delivered.

As of February 29, 2024, $10,000 invested in Invesco QQQ 10 years back is $52,865 now. Comparatively, NASDAQ-100 Index would have given $54,069 while the worth of $10,000 invested in S&P 500 Index would be $33,047.

Some of the popular US stocks such as Microsoft, Meta (Facebook), Amazon, Apple, Netflix, Nvidia, Tesla and Google are a part of the Nasdaq 100 index. The Invesco QQQ Trust (QQQ) is one such ETF that provides access to the Nasdaq’s 100 firms in a single investment.

ETF is a type of mutual fund that tracks a specified index. ETF units can only be bought and sold on a stock exchange during trading hours. ETFs are low-cost investments that allow you to gain exposure to multiple stocks from the same index at once.

But, what should existing and new investors do as far as investing in QQQ is concerned? The NAV and the market price of QQQ has run up a lot and, therefore, according to some investors, a dip is expected as the market can’t keep rising.

Cory Mitchell, an analyst with Trading.biz says, “Even over the last 16 years, the rally QQQ is witnessing is not uncommon. Following a low point the average rally is 183% and the median is 139% since 2008, not including the currently unfolding rally. In that context, the current rally of 78% could extend to between 140% and 180% before a 20% pullback and that would be quite “typical”.

“If the rally were to stall now, it would be the briefest rally above a prior high since 2008. Based on this data, a target of $560 to $575 is reasonable on QQQ before a 20% pullback. That’s about 30% above the current price,” adds Mitchell.

The fortunes of QQQ are significantly influenced by the success of the technology sector, particularly the heavyweights that account for a bigger share of the index. With AI assuming the lead in 2024, the stocks in the Artificial Intelligence area will determine the course for QQQ this year and beyond.