These successful hedge fund managers are betting on growth stocks and Bitcoin.
Several hedge fund billionaires have reduced their positions in Nvidia (NVDA 1.75%) during the first quarter, and filled the holes in their portfolios by purchasing the Invesco QQQ Trust (NASDAQ: QQQ) and/or the iShares Bitcoin Trust (NASDAQ: IBIT), two index funds with significant growth prospects.
- Steven Cohen of Point72 Asset Management sold 304,505 shares of Nvidia, reducing his stake by 55%. He also started a small position in Invesco QQQ Trust, a growth-oriented index fund that tracks Nasdaq-100 hint.
- Israel Englander of Millennium Management sold 720,004 shares of Nvidia, reducing his stake by 35%. He also held an important position in the iShares Bitcoin Trust (GO -1.58%)an index fund that tracks cryptocurrency Bitcoin.
- Ken Griffin of Citadel Advisors sold 2.4 million shares of Nvidia, reducing his stake by 68%. He also increased his stake in Invesco QQQ Trust by 74% and started a small position in iShares Bitcoin Trust.
- David Shaw of DE Shaw sold 1.4 million shares of Nvidia, reducing his stake by 38%. He also started a small position in iShares Bitcoin Trust.
Investors should not interpret these trades to mean Nvidia is a bad investment, but index funds deserve closer scrutiny because all four hedge fund managers have excellent track records. In fact, Citadel, DE Shaw, and Millennium Management are the three most profitable hedge funds in history, and Point72 ranks thirteenth on that list, according to LCH Investments.
Here’s what investors need to know about the Invesco QQQ Trust and iShares Bitcoin Trust.
The Invesco QQQ Trust: a growth-oriented index fund
The Invesco QQQ Trust measures the performance of the Nasdaq-100 Index, which itself tracks the 100 largest stocks listed on the Nasdaq Stock Exchange. The Invesco QQQ Trust is a growth-oriented index fund heavily weighted toward the technology sector. The 10 largest titles are listed below by weight.
- Apple: 8.6%
- Microsoft: 8.6%
- Nvidia: 8.4%
- Broadcom: 5.2%
- Alphabet: 5.3%
- Amazon: 5%
- Metaplatforms: 4.6%
- Costco wholesale: 2.5%
- You’re here : 2.3%
- Netflix: 1.9%
The Invesco QQQ Trust has returned 171% over the past five years, or a compound return of 22% per year. This progress is staggering and may not be sustained over the next five years. However, investors can reasonably assume that the index fund will outperform the S&P500 over long periods. This is what has happened in the past, and there is no reason for it to change in the future. For example, the Invesco QQQ Trust has compounded at 14.6% per year over the past two decades, while the S&P 500 has compounded at 10.3% per year over the same period.
The Invesco QQQ Trust carries an expense ratio of 0.2%, meaning investors will pay $20 per year for every $10,000 invested in the fund. All things considered, the Invesco ETF is a good option for investors who are risk-tolerant and comfortable with volatility, especially those hoping to outperform the stock market as a whole.
The iShares Bitcoin Trust: a cryptocurrency index fund
The iShares Bitcoin Trust is an exchange-traded fund (ETF) that tracks the price of Bitcoin. It is one of several spot Bitcoin ETFs approved by the Securities and Exchange Commission earlier this year. Many experts consider this development a turning point for cryptocurrency.
Spot Bitcoin ETFs provide direct exposure to Bitcoin without the hassle and fees associated with cryptocurrency trading. Investors can simply purchase the iShares Bitcoin ETF (or another spot Bitcoin ETF) through their existing brokerage account. This could unlock demand from retail and institutional investors who have so far stayed on the sidelines.
Indeed, the iShares Bitcoin Trust reached $10 billion in assets faster than any ETF in history, according to the Wall Street Journal. Additionally, more than 400 institutional investors had purchased positions in iShares Bitcoin Trust as of March 31, and these positions were collectively worth more than $3 billion. In short, it appears that the fund is effectively unlocking demand among institutional investors, which could ultimately drive the price of Bitcoin much higher.
For example, Tom Lee of Fundstrat Global Advisors estimates that the cryptocurrency could reach $500,000 by 2029, and Cathie Wood of Ark Invest thinks Bitcoin could reach $3.8 million by 2030. These estimates imply an upside of 657% and 5,657%, respectively, and both analysts attribute their confidence in part to the recent approval of spot Bitcoin ETFs.
Investors should keep in mind that cryptocurrencies are a volatile and risky asset class. But Bitcoin has surged 635% over the past five years, with its price increasing 49% annually. This stunning performance easily outperforms the average of other asset classes like bonds, stocks, precious metals and real estate.
History may or may not repeat itself over the next five years, but the iShares Bitcoin Trust supports a reasonable 0.25% expense ratio, and risk-tolerant investors should consider buying a small position today , given that Bitcoin is around 11% below its peak level. high time.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Trevor Jennevine holds positions at Amazon, Nvidia and Tesla. The Motley Fool holds positions and recommends Alphabet, Amazon, Apple, Bitcoin, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.