QQQ vs. DGRO: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and DGRO is a iShares Large Value fund. So, what’s the difference between QQQ and DGRO? And which fund is better?

The expense ratio of QQQ is 0.12 percentage points higher than DGRO’s (0.2% vs. 0.08%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than DGRO over the past ten years.

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

Summary

QQQ DGRO
Name Invesco QQQ Trust iShares Core Dividend Growth ETF
Category Large Growth Large Value
Issuer Invesco iShares
AUM 174.51B 20B
Avg. Return 21.27% 12.46%
Div. Yield 0.49% 2.04%
Expense Ratio 0.2% 0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

QQQ’s dividend yield is 1.55% lower than that of DGRO (0.49% vs. 2.04%). Also, QQQ yielded on average 8.81% more per year over the past decade (21.27% vs. 12.46%). The expense ratio of QQQ is 0.12 percentage points higher than DGRO’s (0.2% vs. 0.08%).

Fund Composition

Industry Exposure

QQQ vs. DGRO - Industry Exposure

QQQ DGRO
Technology 45.46% 18.98%
Industrials 2.61% 12.52%
Energy 0.0% 0.11%
Communication Services 19.55% 4.53%
Utilities 0.89% 7.34%
Healthcare 7.04% 17.55%
Consumer Defensive 4.68% 10.24%
Real Estate 0.0% 0.0%
Financial Services 2.51% 18.47%
Consumer Cyclical 17.27% 7.42%
Basic Materials 0.0% 2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

QQQ is 26.48% more exposed to the Technology sector than DGRO (45.46% vs 18.98%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 15.02% higher and 9.85% higher respectively (19.55% vs. 4.53% and 17.27% vs. 7.42%). In total, Real Estate, Energy, and Utilities also make up 6.56% less of the fund’s holdings compared to DGRO (0.89% vs. 7.45%).

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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Performance

Annual Returns

QQQ vs. DGRO - Annual Returns

Year QQQ DGRO
2020 48.6% 9.47%
2019 39.12% 30.02%
2018 -0.14% -2.24%
2017 32.7% 22.84%
2016 7.01% 15.27%
2015 9.54% -0.62%
2014 19.12% 0.0%
2013 36.6% 0.0%
2012 18.09% 0.0%
2011 3.44% 0.0%
2010 19.89% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

QQQ vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $32,112 21.27%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in QQQ would have resulted in a final balance of $32,112. This is a profit of $22,112 over 6 years and amounts to a compound annual growth rate (CAGR) of 21.27%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

QQQ’s CAGR is 8.81 percentage points higher than that of DGRO and as a result, would have yielded $12,532 more on a $10,000 investment. Thus, QQQ outperformed DGRO by 8.81% annually.


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