Why Invest in Boring Index Funds? Part 2

My two favorite index funds are SPY and QQQ. They are also the two index funds I personally invest in. Depending on what else I own, they represent roughly 50%–80% of my portfolio at any given time.

SPY tracks the S&P 500, an index that follows 500 of the largest publicly traded companies in the United States. Because of its broad exposure to major American companies across many industries, the S&P 500 is widely regarded as one of the best benchmarks for the U.S. stock market and, to some extent, the overall U.S. economy.

QQQ tracks the Nasdaq-100, which consists of 100 of the largest companies listed on the Nasdaq. It has a heavy concentration in technology and other growth-oriented companies, making it a popular benchmark for the technology and growth sectors.

During July 2026, I started questioning whether I should continue holding both SPY and QQQ. Rather than relying on my emotions, I decided to look at their historical performance.

I compared their share prices between July 11, 2016, and July 11, 2026:

• SPY: The share price increased from $213.10 to $754.95, representing a gain of approximately 254%. A $10,000 investment would have grown to more than $35,000.
• QQQ: The share price increased from $110.88 to $725.51, representing a gain of approximately 554%. A $10,000 investment would have grown to more than $65,000.

Those numbers certainly got my attention. They also reinforced my decision to stay invested in SPY and QQQ during what was a particularly difficult month for the market. July ended up being the Nasdaq's worst month in 22 years.

But this raises an obvious question: If QQQ produced a much higher return, why not just own QQQ?

There are several good reasons.

• First, historical returns do not guarantee future performance. Just because QQQ dramatically outperformed SPY over the past decade doesn't mean it will do the same over the next ten years.
• Second, the past decade was an unusually strong period for large technology and growth companies. Companies such as Apple, Microsoft, Amazon, Nvidia, and other technology giants generated enormous returns for investors. There is no guarantee that the next decade will look anything like the last one.
• Third, QQQ is more concentrated than SPY. Because QQQ has a much heavier weighting toward large technology and growth companies, it can outperform SPY when those sectors are leading the market. But that concentration also creates additional risk. When technology and growth stocks fall sharply, QQQ can fall considerably more than SPY.

For me, that's the reason to own both. QQQ gives me greater exposure to some of the companies and sectors that have driven the market's growth, while SPY gives me broader diversification across the U.S. economy. I don't have to predict which one will perform better over the next decade. I can own both and let the market decide.