QQQ vs. ACWI: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and ACWI is a iShares N/A fund. So, what’s the difference between QQQ and ACWI? And which fund is better?

The expense ratio of QQQ is 0.12 percentage points lower than ACWI’s (0.2% vs. 0.32%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than ACWI over the past ten years.

In this article, we’ll compare QQQ vs. ACWI. We’ll look at fund composition and annual returns, as well as at their risk metrics and performance. Moreover, I’ll also discuss QQQ’s and ACWI’s portfolio growth, industry exposure, and holdings and examine how these affect their overall returns.

Summary

QQQ ACWI
Name Invesco QQQ Trust iShares MSCI ACWI ETF
Category Large Growth N/A
Issuer Invesco iShares
AUM 174.51B 16.85B
Avg. Return 21.27% 10.21%
Div. Yield 0.49% 1.39%
Expense Ratio 0.2% 0.32%

The Invesco QQQ Trust (QQQ) is a Large Growth fund that is issued by Invesco. It currently has 174.51B total assets under management and has yielded an average annual return of 21.27% over the past 10 years. The fund has a dividend yield of 0.49% with an expense ratio of 0.2%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

QQQ’s dividend yield is 0.90% lower than that of ACWI (0.49% vs. 1.39%). Also, QQQ yielded on average 11.06% more per year over the past decade (21.27% vs. 10.21%). The expense ratio of QQQ is 0.12 percentage points lower than ACWI’s (0.2% vs. 0.32%).

Fund Composition

Industry Exposure

QQQ vs. ACWI - Industry Exposure

QQQ ACWI
Technology 45.46% 20.41%
Industrials 2.61% 9.65%
Energy 0.0% 3.48%
Communication Services 19.55% 9.87%
Utilities 0.89% 2.61%
Healthcare 7.04% 11.74%
Consumer Defensive 4.68% 7.15%
Real Estate 0.0% 2.75%
Financial Services 2.51% 15.58%
Consumer Cyclical 17.27% 12.01%
Basic Materials 0.0% 4.73%

The Invesco QQQ Trust (QQQ) has the most exposure to the Technology sector at 45.46%. This is followed by Communication Services and Consumer Cyclical at 19.55% and 17.27% respectively. Real Estate (0.0%), Energy (0.0%), and Utilities (0.89%) only make up 0.89% of the fund’s total assets.

QQQ’s mid-section with moderate exposure is comprised of Financial Services, Industrials, Consumer Defensive, Healthcare, and Consumer Cyclical stocks at 2.51%, 2.61%, 4.68%, 7.04%, and 17.27%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

QQQ is 25.05% more exposed to the Technology sector than ACWI (45.46% vs 20.41%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 9.68% higher and 5.26% higher respectively (19.55% vs. 9.87% and 17.27% vs. 12.01%). In total, Real Estate, Energy, and Utilities also make up 7.95% less of the fund’s holdings compared to ACWI (0.89% vs. 8.84%).

Holdings

QQQ - Holdings

QQQ Holdings Weight
Apple Inc 11.0%
Microsoft Corp 9.82%
Amazon.com Inc 8.35%
Facebook Inc Class A 4.01%
Facebook Inc A 4.01%
Alphabet Inc Class C 3.9%
Tesla Inc 3.9%
NVIDIA Corp 3.65%
Alphabet Inc Class A 3.53%
Alphabet Inc A 3.53%

QQQ’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Facebook Inc A at 11.0%, 9.82%, 8.35%, 4.01%, and 4.01%.

Alphabet Inc Class C (3.9%), Tesla Inc (3.9%), and NVIDIA Corp (3.65%) have a slightly smaller but still significant weight. Alphabet Inc Class A and Alphabet Inc A are also represented in the QQQ’s holdings at 3.53% and 3.53%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

Performance

Annual Returns

QQQ vs. ACWI - Annual Returns

Year QQQ ACWI
2020 48.6% 16.38%
2019 39.12% 26.7%
2018 -0.14% -9.15%
2017 32.7% 24.35%
2016 7.01% 8.22%
2015 9.54% -2.39%
2014 19.12% 4.64%
2013 36.6% 22.91%
2012 18.09% 15.99%
2011 3.44% -7.6%
2010 19.89% 12.31%

QQQ had its best year in 2020 with an annual return of 48.6%. QQQ’s worst year over the past decade yielded -0.14% and occurred in 2018. In most years the Invesco QQQ Trust provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 18.09%, 19.12%, and 19.89% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

QQQ vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in QQQ would have resulted in a final balance of $76,522. This is a profit of $66,522 over 11 years and amounts to a compound annual growth rate (CAGR) of 21.27%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

QQQ’s CAGR is 11.06 percentage points higher than that of ACWI and as a result, would have yielded $49,281 more on a $10,000 investment. Thus, QQQ outperformed ACWI by 11.06% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply