Secrets To Outperforming QQQ In 2024 Without TMT Exposure

2025-01-22 11:15:14 ET

Summary

• 2024 was a stellar year for large-cap growth/tech stocks, with the S&P 500 and Nasdaq 100 ETFs gaining ~25% each.
• The Magnificent-7 stocks drove significant returns, with a cap-weighted MAG-7 ETF delivering a 70% annual return, nearly tripling the S&P 500.
• Our Funds Macro Portfolio outperformed QQQ by over 12% in 2024, with minimal TMT exposure, focusing on Energy, Bitcoin, preferred shares, and geopolitical defense.
• Key strategies included overweighting midstream MLPs, leveraging Bitcoin ETFs (launch), holding short-duration bonds, and capitalizing on geopolitical tensions with defense and airline ETFs.

2024: Year of Large-Cap, Growth, Stocks

2024 was a terrific year for stocks, mostly large-caps growth/tech oriented ones. While the blue chip Dow Jones ( DIA ) and small-cap Russell 2000 ( IWM ) ETFs delivered total returns in the teens (+13.20% on average), the large-cap S&P 500 ( SPY ) and growth/tech Nasdaq 100 ( QQQ ) ETFs gained ~25% each (+25.24% on average).

The main reason for this divergence (QQQ+SPY delivering a yearly performance nearly twice as big as that of DIA+IWM) is the far greater exposure of the former pair to Technology, Media, and Telecommunications ("TMT") than the latter pair....

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