Billionaires Sell Nvidia Stock and Buy 2 Magnificent Index Funds Instead

Several hedge fund billionaires have reduced their positions in Nvidia (NASDAQ:NVDA) 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 (NASDAQ:IBIT)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 Nasdaq-100 Indexwhich 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.

1. Apple: 8.6%

2. Microsoft: 8.6%

3. Nvidia: 8.4%

4. Broadcom: 5.2%

5. Alphabet: 5.3%

6. Amazon: 5%

7. Metaplatforms: 4.6%

8. Costco wholesale: 2.5%

9. You’re here : 2.3%

10. 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.

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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…