The Best Technology ETF to Invest $1,000 in Now | The Motley Fool

The S&P 500 it has produced a total return of 253% over the past ten years. That’s a good return for a passive investment vehicle that provides access to a large group of companies in a variety of industries.

But some investors may want exposure to certain areas of the economy, such as technology-related businesses. If this sounds like you, then you should consider buying the $1,000 worth Invesco Trust QQQ (QQQ -0.04%). Here is the reason.

Owning prominent technology companies

The Invesco QQQ Trust is an organization of exchange fund (ETF) that tracks the performance of the 100 largest non-financial stocks on the Nasdaq exchange. This is very different from the S&P 500 which tracks the movements of the 500 largest companies based in the US.

Clients need to understand the nature of the Invesco QQQ Trust. It is highly active in the information technology sector, accounting for 51% of assets. And the so-called “The Magnificent Seven” combined make up 43% of the ETF.

Historically, this has worked well. These businesses have generally registered strong growth. That’s because they benefit from many trends, such as artificial intelligence, digital payments, digital marketing, electric vehicles, e-commerce and cloud computing. Today, these seven companies are among the most important in the world.

Star performance

The S&P 500 has produced impressive returns in recent years, but the Invesco QQQ Trust has done particularly well. Over the past ten years, it has produced a total return of 443%, which translates to an annualized return of 18.4%. A $1,000 investment in October 2014 could be worth more than $5,400 today.

It helped a lot that the economy was in a very low profit situation during this period. This positive trend fueled the stock’s rise to the top of the QQQ.

Investors may think that owning this ETF is expensive. However, that could not be more true. Price of Invesco QQQ cost estimate of 0.2% means that for every $1,000 invested, only $2 goes towards the annual fee. Traders get to save more of their money over time.

A few years ago, the Ark Innovation ETFCathie Wood’s Ark Invest fund, has received a lot of attention. Like QQQ, it also focuses on innovative and disruptive companies, but its performance has been dismal. Over the past five years, the Ark Innovation ETF has produced a total return of 12.8%, significantly lower than the Invesco QQQ Trust’s 164%. And the Ark Innovation ETF has an expense ratio of 0.75%, about four times that of the QQQ.

Remember this

The Invesco QQQ Trust has had a great year so far, up 21.5% (as of Oct. 30). Because it is trading near its all-time high, some hesitant investors may be wondering if now is still a good time to invest. After all, isn’t it a better idea to just wait for a big return before investing?

In theory, trying to time the market sounds like the right move, buying low and selling high, repeating this pattern over and over. But this is a losing proposition, as no one can do it consistently. In fact, you will cause more risk to your portfolio by doing this.

The best course of action is to consider investing that $1,000 now in the Invesco QQQ Trust and adopt a long-term perspective. If you want to spread that investment, use a dollar price average strategy, investing a small amount of money every month or quarter. This allows you to take advantage of many price points, without having to time the market correctly.

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