The Invesco QQQ Trust (QQQ) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between QQQ and DIA? And which fund is better?
The expense ratio of QQQ is 0.04 percentage points higher than DIA’s (0.2% vs. 0.16%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than DIA over the past ten years.
In this article, we’ll compare QQQ vs. DIA. We’ll look at performance and holdings, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss QQQ’s and DIA’s fund composition, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||SPDR Dow Jones Industrial Average ETF Trust|
|Category||Large Growth||Large Value|
|Issuer||Invesco||SPDR State Street Global Advisors|
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.
QQQ’s dividend yield is 1.12% lower than that of DIA (0.49% vs. 1.61%). Also, QQQ yielded on average 7.92% more per year over the past decade (21.27% vs. 13.35%). The expense ratio of QQQ is 0.04 percentage points higher than DIA’s (0.2% vs. 0.16%).
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 SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.
DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.
QQQ is 28.14% more exposed to the Technology sector than DIA (45.46% vs 17.32%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 15.13% higher and 3.83% higher respectively (19.55% vs. 4.42% and 17.27% vs. 13.44%). In total, Real Estate, Energy, and Utilities also make up 1.11% less of the fund’s holdings compared to DIA (0.89% vs. 2.00%).
|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%.
|UnitedHealth Group Inc||7.63%|
|Goldman Sachs Group Inc||7.23%|
|The Home Depot Inc||6.07%|
|Visa Inc Class A||4.45%|
|Honeywell International Inc||4.18%|
DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.
Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.
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 DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% 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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
QQQ’s CAGR is 7.92 percentage points higher than that of DIA and as a result, would have yielded $38,557 more on a $10,000 investment. Thus, QQQ outperformed DIA by 7.92% annually.
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