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QQQ vs. DFAC: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between QQQ and DFAC? And which fund is better?

The expense ratio of QQQ is 0.01 percentage points higher than DFAC’s (0.2% vs. 0.19%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than DFAC over the past ten years.

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

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Summary

QQQDFAC
NameInvesco QQQ TrustDimensional U.S. Core Equity 2 ETF
CategoryLarge GrowthLarge Blend
IssuerInvescoDimensional Fund Advisors
AUM174.51B13.53B
Avg. Return21.27%13.93%
Div. Yield0.49%1.0%
Expense Ratio0.2%0.19%

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 Dimensional U.S. Core Equity 2 ETF (DFAC) is a Large Blend fund that is issued by Dimensional Fund Advisors. It currently has 13.53B total assets under management and has yielded an average annual return of 13.93% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.19%.

QQQ’s dividend yield is 0.51% lower than that of DFAC (0.49% vs. 1.0%). Also, QQQ yielded on average 7.34% more per year over the past decade (21.27% vs. 13.93%). The expense ratio of QQQ is 0.01 percentage points higher than DFAC’s (0.2% vs. 0.19%).

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Fund Composition

Industry Exposure

QQQ vs. DFAC - Industry Exposure

QQQDFAC
Technology45.46%22.81%
Industrials2.61%14.13%
Energy0.0%2.67%
Communication Services19.55%7.63%
Utilities0.89%1.54%
Healthcare7.04%12.09%
Consumer Defensive4.68%5.94%
Real Estate0.0%0.37%
Financial Services2.51%16.17%
Consumer Cyclical17.27%13.09%
Basic Materials0.0%3.56%

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 Dimensional U.S. Core Equity 2 ETF (DFAC) has the most exposure to the Technology sector at 22.81%. This is followed by Financial Services and Industrials at 16.17% and 14.13% respectively. Utilities (1.54%), Energy (2.67%), and Basic Materials (3.56%) only make up 7.77% of the fund’s total assets.

DFAC’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Healthcare, Consumer Cyclical, and Industrials stocks at 5.94%, 7.63%, 12.09%, 13.09%, and 14.13%.

QQQ is 22.65% more exposed to the Technology sector than DFAC (45.46% vs 22.81%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 11.92% higher and 4.18% higher respectively (19.55% vs. 7.63% and 17.27% vs. 13.09%). In total, Real Estate, Energy, and Utilities also make up 3.69% less of the fund’s holdings compared to DFAC (0.89% vs. 4.58%).

Holdings

QQQ - Holdings

QQQ HoldingsWeight
Apple Inc11.0%
Microsoft Corp9.82%
Amazon.com Inc8.35%
Facebook Inc Class A4.01%
Facebook Inc A4.01%
Alphabet Inc Class C3.9%
Tesla Inc3.9%
NVIDIA Corp3.65%
Alphabet Inc Class A3.53%
Alphabet Inc A3.53%

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%.

DFAC - Holdings

DFAC HoldingsWeight
Apple Inc4.7%
Microsoft Corp3.81%
Amazon.com Inc2.39%
Johnson & Johnson1.05%
Facebook Inc Class A1.05%
JPMorgan Chase & Co1.0%
Alphabet Inc Class C0.85%
Alphabet Inc Class A0.84%
Berkshire Hathaway Inc Class B0.75%
Visa Inc Class A0.74%

DFAC’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Johnson & Johnson, and Facebook Inc Class A at 4.7%, 3.81%, 2.39%, 1.05%, and 1.05%.

JPMorgan Chase & Co (1.0%), Alphabet Inc Class C (0.85%), and Alphabet Inc Class A (0.84%) have a slightly smaller but still significant weight. Berkshire Hathaway Inc Class B and Visa Inc Class A are also represented in the DFAC’s holdings at 0.75% and 0.74%.

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Performance

Annual Returns

QQQ vs. DFAC - Annual Returns

YearQQQDFAC
202048.6%15.8%
201939.12%29.54%
2018-0.14%-9.43%
201732.7%18.82%
20167.01%16.31%
20159.54%-2.53%
201419.12%9.56%
201336.6%37.55%
201218.09%17.93%
20113.44%-1.96%
201019.89%21.67%

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 2013 was the strongest year for DFAC, returning 37.55% on an annual basis. The poorest year for DFAC in the last ten years was 2018, with a yield of -9.43%. Most years the Dimensional U.S. Core Equity 2 ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 15.8%, 16.31%, and 17.93% respectively.

Portfolio Growth

QQQ vs. DFAC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QQQ$10,000$76,52221.27%
DFAC$10,000$38,79613.93%

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 DFAC, the end total would have been $38,796. This equates to a $28,796 profit over 11 years and a compound annual growth rate (CAGR) of 13.93%.

QQQ’s CAGR is 7.34 percentage points higher than that of DFAC and as a result, would have yielded $37,726 more on a $10,000 investment. Thus, QQQ outperformed DFAC by 7.34% annually.


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