Billionaires Are Buying a Supercharged Index Fund That Includes Nvidia, Tesla, and Other "Magnificent Seven" Stocks

Core Insights - The S&P 500 has increased by 27% year to date, driven by enthusiasm for artificial intelligence, with the "Magnificent Seven" stocks contributing over half of these gains [1] - The Invesco QQQ Trust, which offers significant exposure to the Magnificent Seven, has seen substantial purchases from hedge fund billionaires in the third quarter [2] Group 1: Invesco QQQ Trust Overview - The Invesco QQQ Trust tracks the Nasdaq-100 index, heavily invested in the information technology sector, with the Magnificent Seven stocks accounting for 45% of its weighted exposure [4] - The top ten holdings in the Invesco QQQ Trust include Apple (8.9%), Nvidia (7.8%), and Microsoft (7.8%), among others, with the Magnificent Seven reporting a net profit margin of 23.5% compared to 9.2% for the rest of the S&P 500 [5][6] Group 2: Performance Metrics - The Invesco QQQ Trust has outperformed the S&P 500 over various time frames, doubling its return over the last decade and tripling it over the last two decades [8] - Specific returns for the Invesco QQQ Trust include 35% over the past year, 33% over three years, and 412% over ten years, compared to 32%, 29%, and 200% for the S&P 500 respectively [9] Group 3: Future Growth and Risks - The Magnificent Seven are projected to achieve earnings growth of 36% this year and 21% next year, significantly higher than the 3% and 13% expected for the other S&P 500 companies [6] - The Invesco QQQ Trust is associated with high volatility, with a three-year beta of 1.18, indicating it tends to amplify market movements [10] - The expense ratio for the Invesco QQQ Trust is 0.2%, lower than the industry average of 0.36% [10] Group 4: Long-term Outlook - The Invesco QQQ Trust is viewed as a strong long-term investment, with expectations of continued outperformance driven by advancements in artificial intelligence and other technologies [11]