Billionaires Are Buying an AI Index Fund That Could Turn $500 per Month Into $432,300

The institution’s asset manager recently submitted its latest form 13F. It filed disclosures required by the SEC to anyone who owns at least $100 million in equity securities, such as stocks and index funds. Several hedge fund billionaires have bought Investco QQQ Trust (QQQ -0.81%)) In the first quarter detailed below:

• Louis Bacon’s Moore Capital Management purchased 31,000 shares. The Investco QQQ Trust remains a relatively small position in the portfolio.
• Steven Cohen’s Point 72 Asset Management has added 7,950 shares. The Investco QQQ Trust remains a relatively small position in the portfolio.
• Ken Griffin’s Citadel Advisors added 2.2 million shares. The Investco QQQ Trust is the third largest in the portfolio except for options.
• Israel England’s Millennium Management has added 474,300 shares. The Investco QQQ Trust is ranked among the 25 largest positions in the portfolio, with the exception of options.

Investors need to know two things about the Investco QQQ Trust. First, index funds track 100 shares Nasdaq Composite (^ixic -1.00%))fell into the market correction area in the first quarter. Second, history shows that index funds can convert $500 a month to $432,300 over 20 years.

Investco QQQ Trust offers exposure to many technology companies that may benefit from artificial intelligence

NASDAQ-100 Track 100 of the largest companies listed on the NASDAQ Stock Exchange. The index is re-aligned quarterly and re-structured annually. It excludes financial companies and is heavily weighted on the technology sector. The Investco QQQ Trust measures the performance of your Nasdaq-100.

The 10 largest positions in index funds are listed by weight below:

1. Microsoft: 8.6%
2. nvidia: 8.2%
3. apple: 7.5%
4. Amazon: 5.4%
5. alphabet: 4.9%
6. Broadcom: 4.5%
7. Meta Platform: 3.5%
8. Netflix: 3.2%
9. Tesla: 3.1%
10. Costco Wholesale: 2.8%

Importantly, some of the above companies are likely to benefit from the demand for artificial intelligence (AI) over the next few years. Microsoft, Amazon, and Alphabet are the three largest cloud computing platforms. Nvidia is a leading supplier of data center GPUs. Broadcom is the market leader in custom AI chips. Metaplatforms use AI to improve engagement across social media properties. Tesla is developing Robotaxis and autonomous humanoid robots.

How Investco QQQ Trust can turn $500 a month to $432,300

The Investco QQQ Trust has risen 1,250% over the past 20 years to 13.9% per year. However, when dividend payments were included, the index fund achieved a total revenue of 1,470%, up 14.7% per year.

Certainly, forecasting an annual revenue of 14.7% may be overly optimistic. Therefore, investors should introduce safety margins by assuming a more modest annual return of 12%. At that pace, the $500 invested monthly in the Invesco QQQ Trust is worth $105,200 per year and $432,300 per 20 years.

Importantly, some investors may want to save more than $500 per month. The chart below provides a detailed explanation of how monthly contributions grow over time, assuming an annual return rate of 12%.

Returns were determined using the Investor.gov compound interest calculator.

Investors need two more pieces of information. First, the Invesco QQQ Trust has been extremely volatile throughout history as it is so heavy on the technology sector. Over the past decade, index funds have fallen by more than 10% from their record highs and have fallen by more than 20% from their four record highs.

Secondly, the small expense ratio of Invesco QQQ Trust is 0.20%, so shareholders pay $20 per year for every $10,000 invested in an index fund. In comparison, in 2024, the average expense ratio for US index and mutual funds was 0.34%.