The Invesco QQQ Trust (QQQ) and the Vanguard Total Bond Market Index Fund ETF Shares (BND) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and BND is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between QQQ and BND? And which fund is better?
The expense ratio of QQQ is 0.17 percentage points higher than BND’s (0.2% vs. 0.03%). QQQ also has a high exposure to the technology sector while BND is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than BND over the past ten years.
In this article, we’ll compare QQQ vs. BND. We’ll look at performance and holdings, as well as at their fund composition and annual returns. Moreover, I’ll also discuss QQQ’s and BND’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||Vanguard Total Bond Market Index Fund ETF Shares|
|Category||Large Growth||Intermediate-Term Bond|
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 Vanguard Total Bond Market Index Fund ETF Shares (BND) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 312.15B total assets under management and has yielded an average annual return of 4.09% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.03%.
QQQ’s dividend yield is 1.53% lower than that of BND (0.49% vs. 2.02%). Also, QQQ yielded on average 17.18% more per year over the past decade (21.27% vs. 4.09%). The expense ratio of QQQ is 0.17 percentage points higher than BND’s (0.2% vs. 0.03%).
|Facebook Inc Class A||4.01%|
|Facebook Inc A||4.01%|
|Alphabet Inc Class C||3.9%|
|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%.
|BND Bond Sectors||Weight|
BND’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Below B at 68.72%, 16.17%, 11.87%, 3.34%, and 0.01%. The fund is less weighted towards B (0.0%), BB (0.0%), and US Government (0.0%) rated bonds.
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 BND, returning 8.71% on an annual basis. The poorest year for BND in the last ten years was 2013, with a yield of -2.14%. Most years the Vanguard Total Bond Market Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2014, when gains were 3.62%, 4.04%, and 5.96% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 BND, the end total would have been $15,456. This equates to a $5,456 profit over 11 years and a compound annual growth rate (CAGR) of 4.09%.
QQQ’s CAGR is 17.18 percentage points higher than that of BND and as a result, would have yielded $61,066 more on a $10,000 investment. Thus, QQQ outperformed BND by 17.18% annually.
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