Would you like to invest and grow your money? Choosing ETFs as the best option, which is the best ETF fund in a QQQ vs SPY matchup?
Both QQQ and SPY are popular funds among investors. Additionally, the share prices of these two different funds have performed well recently, making the decision even more complex.
The Invesco QQQ Trust, or QQQ, offers an investment portfolio comparable to the Nasdaq 100 Index. The SPDR S&P 500 ETF Trust, or SPY, offers investors exposure to 500 of the largest US companies and accounts for nearly 75% of the nation's stock market value.
In this article, we'll break down the important characteristics of each, analyze the similarities and differences between them, and provide our best ETF investment recommendations. Without further ado, let's get started.
For some background you can read more about it hereactions,Turn on, eETF (Exchange Traded Fund)from our previous posts.
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QQQ: Invesco QQQ Trust Series 1
QQQ is an ETF offered by Invesco that tracks the NASDAQ 100.
The NASDAQ 100, an index of the 100 largest non-financial stocks listed on the NASDAQ exchange, tracks the largest technology companies in the United States.
This ETF facilitates access to several pioneering and innovative companies, including high-tech companies such as Tesla, Nvidia, Microsoft and the famous FAANG shares.
Invesco's QQQ is one of the most popular and largest ETFs today. It has over $205 billion in assets and offers a dividend yield of around 0.45%.
QQQ has an expense ratio of 0.2%.
The total number of shares for QQQ is 100, and the top ten shares represent 52% of the fund. While QQQ may be comparatively more volatile than SPY, it has outperformed SPY over the past decade.
SPION: SPDR S&P 500 ETF Trust
The SPY ETF is a fund offered by the State Street Global Advisors Trust Company that tracks the S&P 500 index. Established in 1993, the SPY Fund currently has assets in excess of $424 billion.
Similar to QQQ, SPY also focuses on the biggest tech companies like Google, Microsoft, and Apple. SPY also has other sectors like various consumer sectors, financial, energy, etc.
SPY is an ETF of State Street Global Advisors Trust Company. It maps the S&P 500 index and comprises a total of 506 stocks. The top ten stocks make up around 28% of the fund and have a dividend yield of around 1.2%. Additionally, SPY has an expense ratio of 0.09%.
The value of the SPY fund has risen sharply over the past year. There are several reasons for this. One is that Morgan Stanley and Goldman Sachs performed well in financials, encouraging investors to look forward to the next rate hike. The rise in oil and gas prices caused energy stocks to skyrocket. These two developments improved the performance of the SPY fund.
QQQ vs SPY: main differences
SPY and QQQ are top tier funds withlong term investors. Both exchange-traded funds will trade on the same day forstock market hoursFim.
Although both are ETFs, they are different. Here are some of the key differences between the two ETFs.
- QQQ is offered by Invesco, while State Street Global Advisors Trust Company offers SPY.
- QQQ tracks the NASDAQ 100 Index while SPY tracks the S&P 500 Index.
- QQQ has $172.68 billion in assets under management, while SPY has $379.57 billion under management.
- QQQ's expense ratio is 0.2% while SPY's expense ratio is cheaper by 0.09%.
- QQQ has a dividend yield of 0.45%, while SPY has a dividend yield of 1.2%.
- QQQ invests in 100 stocks and is mainly made up of technology companies, while SPY has 500 stocks, which makes it more diversified.
From the above statements, we can see that SPY has a lower expense ratio than QQQ and also a higher dividend yield.
QQQ vs. SPY: differences in composition
In terms of the composition of the two ETFs, QQQ is heavily geared towards the technology sector. However, SPY is known for its diversification across multiple sectors and is a broader fund.
QQQ owns approximately 100 stocks, including the top 100 US companies traded on the NASDAQ Exchange. Compared to other ETFs, it has fewer shares. SPY owns five times as many shares as QQQ, with about 506 shares, including the largest companies in the United States.
In percentage terms, QQQ accounts for 63% of tech stocks, while SPY owns just 34% of tech stocks. As a result, QQQ is a more concentrated fund and its top ten holdings represent around 52% of its total portfolio. By contrast, SPY's top ten holdings account for 28% of the total portfolio, making it a more diversified portfolio.
The above values imply that the performance of QQQ depends on the performance of selected stocks like Amazon, Apple and Microsoft. Investing in a larger holding stock like SPY will minimize your risk and diversify your portfolio.
QQQ vs SPY: Top 10 Holdings
Here is the list of the top 10 holdings of the two funds that track their respective indexes. The two funds share many companies; however, the respective weights vary.
|Letter A (Google)||1,75%||3,80%|
|Berkshire Hathaway B||1,51%||A|
|Johnson & Johnson||1,27%||A|
As you can see from the table, the QQQ weights for the top five holdings, including Apple, Microsoft, Amazon, Facebook and Google, are almost twice as much as SPY. So while QQQ tends to be tech heavy, it also carries weight with the likes of Adobe, Tesla, PayPal, and Nvidia.
QQQ vs SPY: performance differences
From the table, we can see that the performance of QQQ is highly dependent on the performance of key players in the Technology sector. So if the technology sector is doing well, QQQ is also doing well.
This trend has been widespread over the past decade and QQQ has outperformed SPY. In the last quarter of 2021, QQQ had an average return of 11.32%, while SPY only returned 11.02%. However, we cannot guarantee that the next decade will be like the past in terms of index fund performance.
Since its inception in 1999, the QQQ has shown remarkable performance, consistently outperforming the S&P 500 Index. Due to its superior performance, it tends to be favored over others by long-term investors and is currently in the top 1% of large-cap growth funds.
Here is a comparison of the performance of the two funds over different investment periods.
|1 month||-8,44%||-5,02 %|
|course of the year||-20,03%||-12,20%|
While the two funds have performed differently over the past decade, QQQ is outperforming SPY by nearly 5% a year. In the long term, QQQ's performance has been better in the past.
QQQ vs. SPION: Taxas
QQQ's expense ratio is 0.20% while SPY's expense ratio is 0.09%. Therefore, the difference between the expense ratios of the two funds is 0.11% and QQQ costs more.
An important conclusion from the comparison is that although QQQ offers higher returns, it is more volatile and incurs higher costs. But if you want high returns and can tolerate high volatility, QQQ might be a better option for you.
However, if you want more stable long-term returns and lower risks and costs, SPY may be a better option. As it offers a diversified portfolio, it is less volatile compared to QQQ and reduces risk.
Frequently Asked Questions – QQQ Vs. SPY
Is QQQ a good investment?
QQQ is in the top 1% of large cap growth funds. It offers the highest possible returns and is one of the most popular investments among long-term investors.
What's better than QQQ?
With QQQM, Invesco has launched a cheaper alternative to QQQ. While QQQ has an expense ratio of 0.20%, QQQM has an expense ratio of 0.15%, 0.05% lower than QQQ. So in terms of cost, QQQM might be a better option.
QQQ is the best ETF?
QQQ is the fifth most popular exchange-traded fund in the world, with approximately $177 billion in assets. It offers a dividend yield of 0.45%.
Conclusion – QQQ vs. SPY: Your choice
For the purposes of this article, QQQ will be compared to SPY. If we only look at the returns, QQQ offers a higher return on your investment. However, comparisons on different bases like ROI, risk factors, fund management costs, etc. clearly show that the two ETFs have their pros and cons.
Finally -QQQ vs. SPY?-It's your decision. Before investing, ask yourself: what are your investment goals? Do you prefer low investment costs and low risks over potential profits? Then SPY is the right choice for you. If you want to spend more and risk more for bigger wins, go for QQQ.
Whichever ETF you choose, the most important thing is that you make the step there with your investment.make money work for youand secure your futureFinancial freedom. As a fund investor, make the best choice for you!
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Is QQQ better than SPY? ›
At the risk of oversimplifying, QQQ is a better way to invest in tech while SPY is better for investing in the market as a whole.Which has better returns QQQ or SPY? ›
QQQ has a 0.20% expense ratio, which is higher than SPY's 0.09% expense ratio. Scroll down to visually compare performance, riskiness, drawdowns, and other indicators and decide which better suits your portfolio: QQQ or SPY.Is QQQ more volatile than SPY? ›
Performances SPY Vs QQQ:
But excellent performance means higher risks. The QQQ is a volatile ETF; as you can see, the returns have dropped over 20% for the QQQ and only 10% for the SPY. So yes, the QQQ offers big returns but with more significant risk.
QQQ Pros. Long-term growth potential: QQQ holdings include many companies that develop new technologies, such as computers and zero-emission vehicles. That gives the QQQ ETF more potential for long-term growth. QQQ is also much more diversified across the growth technology sector.Does QQQ outperform S&P? ›
Invesco QQQ ETF (QQQ) returned -0.09% in Q4 (on an NAV basis, 9/30/2022 – 12/31/2022) and underperformed the S&P 500 by 7.64% which returned +7.55%. Investors' focus remained firmly on inflation and action from the FOMC.
If you're looking for the best return possible on your money, then you're going to want to go with QQQ. If you want to be a passive investor and not have to stress as much about market fluctuations, then you should invest in VOO.What is the average yearly return on QQQ? ›
|Average||NAV Return||Sharpe Ratio|
|SPGP||Invesco S&P 500 GARP ETF||91.76%|
|IXN||iShares Global Tech ETF||88.54%|
|GRID||First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index||88.29%|
|CURE||Direxion Daily Healthcare Bull 3x Shares||87.05%|
During the periods of volatility decay, TQQQ underperforms QQQ by an average of 8.4% per year.Why is QQQ better than SPY? ›
It has a 13.7% weight in QQQ and a 7.3% weight in SPY, a difference of 6.4%. So, when Apple shares outperform the S&P 500, the Nasdaq, and thereby QQQ, has a good chance to outperform. The same goes for stocks like Microsoft, Amazon, and Tesla which have significantly larger weights in QQQ.
How much overlap between QQQ and SPY? ›
A free website to use for your research
We really like this one. Here are the results of our fund overlap screen between SPY and QQQ: Notice that 85% of the holdings in QQQ are also held in SPY. So any investor who is pairing SPY with QQQ needs to be sure they are weighting QQQ appropriately.
Thus, QQQ is a good option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space. The iShares Russell 1000 Growth ETF (IWF) and the Vanguard Growth ETF (VUG) track a similar index.What are the top 5 holdings in QQQ? ›
Invesco Qqq Trust quote is equal to 296.260 USD at 2023-01-28. Based on our forecasts, a long-term increase is expected, the "QQQ" fund price prognosis for 2028-01-19 is 498.373 USD. With a 5-year investment, the revenue is expected to be around +68.22%. Your current $100 investment may be up to $168.22 in 2028.Is SPY a good long term investment? ›
Absolutely, SPY pays dividends. SPY stock collects the dividends issued by all the dividend-paying stocks in the S&P 500 — and pays them to you. And, currently, the dividend yield on the SPY is roughly 1.6%. That means if you invest $25,000 in SPY stock, you will receive $400 a year, paid quarterly, on your investment.What ETF consistently beats the S&P 500? ›
Notably, the Schwab U.S. Dividend Equity ETF (SCHD) is the only value-styled ETF to beat ETFs tracking the S&P 500.Is it better to invest in Nasdaq or S&P? ›
So, if you are looking to own a more diversified basket of stocks, the S&P 500 will be the right fit for you. However, those who are comfortable with the slightly higher risk for the extra returns that investing in Nasdaq 100 based fund might generate will be better off with Nasdaq 100.What ETF competes with QQQ? ›
The largest ETF holder of QQQ is the Main Sector Rotation ETF (SECT), with approximately 291.27K shares. Investors may also find of interest that the ETF with the largest allocation to QQQ stock is LHA Market State Tactical Q ETF (MSTQ), with a portfolio weight of 40.73%.Which ETF does Warren Buffett recommend? ›
One of the ETFs in Warren Buffett's portfolio is the Vanguard S&P 500 ETF (VOO 0.28%). This fund tracks the S&P 500 index itself, which means it includes the same stocks as the index and aims to mirror its performance.What is the best ETF for 2022? ›
|Simplify Interest Rate Hedge ETF||PFIX||95% 95% 95%|
|VanEck Oil Service ETF||OIH||66% 66% 66%|
|iSHares U.S. Oil Equipment & Services ETF||IEZ||66% 66% 66%|
|Vanguard Energy ETF||VDE||62% 62% 62%|
What are the top 5 ETFs to buy? ›
- Vanguard 500 Index Fund. ...
- Invesco QQQ Trust. ...
- Vanguard Growth Fund. ...
- Avantis Small-Cap U.S Value ETF. ...
- Franklin U.S. Low Volatility High Dividend ETF. ...
- Vanguard Total Stock Market ETF. ...
- iShares Core MSCI Total International Stock ETF.
The all-time high Invesco QQQ stock closing price was 400.54 on December 27, 2021. The Invesco QQQ 52-week high stock price is 371.83, which is 25.5% above the current share price.What is the target price for QQQ? ›
Stock price target for Invesco QQQ Trust, Series 1 QQQ are 290.93 on downside and 295.93 on upside.Does QQQ pay capital gains? ›
And many, such as Invesco QQQ, Invesco S&P 500 Equal Weight ETF, and Invesco Taxable Municipal Bond ETF, have never paid capital gains distributions in their lifetime,” says the issuer.What is Vanguard's best performing ETF? ›
The largest Vanguard ETF is the Vanguard Total Stock Market ETF VTI with $276.03B in assets. In the last trailing year, the best-performing Vanguard ETF was VDE at 47.95%. The most recent ETF launched in the Vanguard space was the Vanguard Ultra-Short Bond ETF VUSB on 04/05/21.What is the fastest growing ETF? ›
|WEAT||Teucrium Wheat Fund||-5.64%|
- Vanguard High Dividend Yield ETF (ticker: VYM)
- iShares Core U.S. REIT ETF (USRT)
- iShares Broad USD Investment Grade Corporate Bond ETF (USIG)
- Vanguard Extended Duration Treasury ETF (EDV)
- SPDR Bloomberg High Yield Bond ETF (JNK)
The most obvious risk comes during a bear market. Compounding losses at three times will quickly erode profits. This reason alone is why TQQQ should never be an “all in” position. You have to recognize your own risk tolerance before investing in any leveraged ETF.How volatile is QQQ? ›
QQQ implied volatility (IV) is 28.1, which is in the 41% percentile rank. This means that 41% of the time the IV was lower in the last year than the current level. The current IV (28.1) is 3.2% above its 20 day moving average (27.2) indicating implied volatility is trending higher.How long should you hold a 3x ETF? ›
A trader can hold the majority of these ETFs including TQQQ, FAS, TNA, SPXL, ERX, SOXL, TECL, USLV, EDC, and YINN for 150-250 days before suffering a 5% underperformance although a few, like NUGT, JNUG, UGAZ, UWT, and LABU are more volatile and suffer a 5% underperformance in less than 130 days and, in the case of JNUG ...
Why is SPY the best ETF? ›
SPDR S&P 500 ETF (SPY)
The State Street SPDR S&P 500 ETF is not only the oldest U.S. listed exchange-traded fund, but it also typically has both the largest assets under management (AUM) and highest trading volume of all ETFs.
The largest NASDAQ-100 Index ETF is the Invesco QQQ Trust QQQ with $152.31B in assets. In the last trailing year, the best-performing NASDAQ-100 Index ETF was QID at 23.11%. The most recent ETF launched in the NASDAQ-100 Index space was the Invesco NASDAQ 100 ETF QQQM on 10/13/20.How much does QQQ pay in dividends? ›
Historical dividend payout and yield for Invesco QQQ (QQQ) since 2005. The current TTM dividend payout for Invesco QQQ (QQQ) as of January 27, 2023 is $2.14. The current dividend yield for Invesco QQQ as of January 27, 2023 is 0.73%.Should you buy QQQ or QQQM? ›
QQQ and QQQM both track the Nasdaq 100 Index, meaning their lineups are identical. The marquee difference between the two products is that QQQM is better suited for long-term investors due to its lower annual expense ratio of 0.15%, or $15 on a $10,000 stake.Is Apple part of QQQ? ›
An investment in innovation. Invesco QQQ is an exchange-traded fund that tracks the Nasdaq-100 Index™ and features Apple, Google, Microsoft, and more.Is QQQ A Buy Sell or Hold? ›
The QQQ ETF holds buy signals from both short and long-term moving averages giving a positive forecast for the stock. Also, there is a general buy signal from the relation between the two signals where the short-term average is above the long-term average.What is the most popular ETF? ›
SPY currently leads the ETF industry with an incredible $378 billion in AUM. The ETF is so popular that many investors and traders use it as a reference for the S&P 500 altogether. Anecdotally, I've heard more people quote SPY than the actual ticker for the S&P 500 Index (SPX).Are SPY and QQQ the same? ›
QQQ and SPY are two very different funds. QQQ from Invesco tracks the NASDAQ 100 Index. SPY from SPDR tracks the S&P 500 Index. QQQ is 100 stocks in a handful of sectors, largely concentrated in tech.Is Nasdaq 100 better than S&P 500? ›
Nasdaq 100 has significantly outperformed S&P 500 in terms of performance.Why should I buy QQQ? ›
SQQQ is ideal for very short-term short bets against the Nasdaq 100 index. Overall, SQQQ best serves as a very specific and small satellite holding in an aggressive investor's portfolio.