Compare and contrast key facts about Invesco QQQ (QQQ) and Vanguard S&P 500 ETF (VOO).
QQQ and VOO are both exchange-traded funds (ETFs), meaning they are traded on stock exchanges and can be bought and sold throughout the day. QQQ is a passively managed fund by Invesco that tracks the performance of the NASDAQ-100 Index. It was launched on Mar 10, 1999. VOO is a passively managed fund by Vanguard that tracks the performance of the S&P 500 Index. It was launched on Sep 7, 2010. Both QQQ and VOO are passive ETFs, meaning that they are not actively managed but aim to replicate the performance of the underlying index as closely as possible.
Scroll down to visually compare performance, riskiness, drawdowns, and other indicators and decide which better suits your portfolio: QQQ or VOO.
VOO - Performance Comparison. In the year-to-date period, QQQ achieves a 3.82% return, which is significantly lower than VOO's 5.98% return. Over the past 10 years, QQQ has outperformed VOO with an annualized return of 18.13%, while VOO has yielded a comparatively lower 12.42% annualized return.
Average Return. In the past year, QQQ returned a total of 35.89%, which is significantly higher than VOO's 24.39% return. Over the past 10 years, QQQ has had annualized average returns of 18.13% , compared to 12.47% for VOO. These numbers are adjusted for stock splits and include dividends.
Vanguard Information Technology ETF (VGT) has a higher volatility of 6.00% compared to Invesco QQQ (QQQ) at 5.15%. This indicates that VGT's price experiences larger fluctuations and is considered to be riskier than QQQ based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
If we compare the top 10 companies by weight in each of the indices, 7 of them will match. The correlation between stock prices of QQQ and VOO is 0.89. This is considered to be a high indicator.
The QQQ ETF offers buy-and-hold investors low expenses and long-term growth potential with enough diversification to avoid the risks of betting on one company. On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps.
The number one biggest problem with Invesco QQQ Trust is that a small number of stocks make up a large percentage of the fund. That's not the fund's fault, it is simply tracking the index. But you can't ignore this lack of diversification.
The ProShares Short QQQ (PSQ) returns the inverse of the index on a one-to-one basis. The ProShares UltraShort QQQ (QID) is a 2x inverse ETF, and the ProShares UltraPro UltraShort QQQ (SQQQ) is a 3x inverse ETF.
If you only want to own the biggest and safest companies, choose VOO. If you want broader exposure and more diversification, choose VTI. Or, you could also invest in both, for example, by putting half in VOO and half in VTI.
QQQ is the most popular Nasdaq ETF because it uses a full replication strategy, meaning this ETF includes every security in the Nasdaq Index rather than a representative sample. Invesco QQQ offers an annualized return of 9.5% since its inception in 1999.
Below, we've listed some key differentiators that an investor should keep in mind when comparing two similar ETFs dedicated to the same market segment.
VOO charges 3 basis points, while SPY charges 9 basis points. Both are very low cost compared to the average ETF in the US market. Both are great options, well diversified, are run by amazing teams. However, fees do matter, and you get what you don't pay for in the financial industry.
VOO has over $1 trillion in assets under management and provides investors with exposure to all the largest companies in the United States. You're getting a basket of stocks that has a 29.81% weighting toward technology, and the Magnificent 7 makes up roughly 25% of the index.
The QQQ gained 18.1% annually over the past 10 years. That tops all of the nearly 300 ETFs in the category. That easily outpaces the 12.6% average annual gain of the SPDR S&P 500 ETF Trust (SPY) — the cornerstone of most investors' portfolios. And the QQQ is cheap, only charging 0.2%.
If we compare SPY vs QQQ in terms of sector diversification, it is clear that QQQ, which is a NASDAQ-100 ETF, is strongly inferior to the SPY ETF. The tech sector (Electronic Technology + Technology Services) accounts for over 60% of its net assets.
Nasdaq 100 has significantly outperformed S&P 500 in terms of performance. Over the past 15 years, Nasdaq 100 has delivered a CAGR of around 16%, while S&P 500 has returned about 8%.
Introduction: My name is Tyson Zemlak, I am a excited, light, sparkling, super, open, fair, magnificent person who loves writing and wants to share my knowledge and understanding with you.
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