Here's What Nobody Tells You Before You Buy a Nasdaq-100 ETF

By Matt Frankel, CFP – Mar 4, 2026 at 6:41AM ESTKey PointsThe Invesco QQQ ETF gives you exposure to all 100 stocks in the Nasdaq-100 benchmark index. The Nasdaq-100 is a weighted index, with 47% of the index's weight composed of just 10 companies.This concentration risk is very important to understand before investing. It's no secret that the stock market's returns in recent years have been fueled by technology stocks. Companies like Nvidia (NVDA 1.33%), Meta Platforms (META +0.23%), and Broadcom (AVGO 1.58%) have performed extraordinarily well, and are a big reason why the Nasdaq-100 has gained more than 500% in the past decade alone. With the massive buildout of artificial intelligence (AI) infrastructure currently underway, and the rapid advancement of AI as well as several other exciting technologies, such as autonomous vehicles, Internet of Things, and more, there's a solid case to be made that a Nasdaq-100 index fund like the Invesco QQQ ETF (QQQ 1.07%) could still be an excellent addition to your portfolio. Image source: Getty Images. To be clear, it's entirely possible that the Nasdaq-100 will have some excellent years ahead of it. And even if it has a rough patch, investors are highly likely to create significant wealth over the long term with this ETF. But there's one big caveat to keep in mind before you buy. About the Invesco QQQ ETF The Invesco QQQ ETF is the largest exchange-traded fund, or ETF, that tracks the Nasdaq-100 benchmark index. It has about $395 billion of investor assets under management, and its expense ratio (annual investment fee expense) of 0.18% is well below what the average technology-heavy index fund charges. One thing you need to know Here's one important point you need to know. The Invesco QQQ ETF is a weighted index fund, meaning that companies with the highest market capitalizations make up a greater percentage of the fund's assets. QQQ Total Return Level data by YCharts In other words, the ETF owns shares of all 100 companies that comprise the Nasdaq-100 index. But it doesn't invest in each of them equally. In fact, the largest holding (Nvidia) accounts for 8.4% of the ETF's assets. On the other hand, the smallest company in the Nasdaq-100, Atlassian (TEAM +6.18%), only gets a 0.07% allocation. This means that a disproportionate amount of your money is invested in just a few mega-cap companies. In fact, the 10 largest holdings in the Invesco QQQ ETF make up a staggering 47% of the portfolio. To be clear, this concentration can certainly be a good thing if companies like Nvidia, Apple (AAPL 0.35%), Microsoft (MSFT +1.35%), and the rest of the trillion-dollar tech giants continue to deliver strong returns. But it's also a big risk factor. If the largest tech companies perform poorly, it can cause your investment to lose value -- even if the other 90 companies in the index are performing quite well.Read NextMar 2, 2026 •By Katie BrockmanIVV vs. QQQ: Is S&P 500 Stability or Tech-Focused Growth the Better Buy for Investors?Mar 2, 2026 •By Katie BrockmanMGK vs. QQQ: Here's How to Tell Which Popular Growth ETF Is Right for YouFeb 20, 2026 •By Trevor JennewineBillionaires Buy an AI Index Fund That Could Turn $500 Per Month Into $485,000Feb 16, 2026 •By Neil PatelThink It's Too Late to Buy Invesco QQQ Trust? Here's the 1 Reason Why There's Still Time.Feb 12, 2026 •By Dave KovaleskiInvesco QQQ or iShares Russell 2000 Growth ETF: Which is the Better Buy?Feb 10, 2026 •By David Jagielski, CPAAfter Soaring 84% in 5 Years, Is the Invesco QQQ Trust Still a Good ETF to Buy in 2026?About the AuthorMatt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.TMFMattFrankelX@MattFrankelCFPStocks MentionedInvesco QQQ TrustNASDAQ: QQQ$601.58(-1.07%)-$6.51Meta PlatformsNASDAQ: META$655.08(+0.23%)+$1.52MicrosoftNASDAQ: MSFT$403.81(+1.32%)+$5.26AppleNASDAQ: AAPL$263.79(-0.35%)-$0.93NvidiaNASDAQ: NVDA$180.05(-1.33%)-$2.43BroadcomNASDAQ: AVGO$313.79(-1.58%)-$5.03AtlassianNASDAQ: TEAM$78.36(+6.18%)+$4.56*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.