The Invesco QQQ Trust (QQQ) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between QQQ and EMB? And which fund is better?
The expense ratio of QQQ is 0.19 percentage points lower than EMB’s (0.2% vs. 0.39%). QQQ also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, QQQ has provided higher returns than EMB over the past ten years.
In this article, we’ll compare QQQ vs. EMB. We’ll look at holdings and performance, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss QQQ’s and EMB’s annual returns, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Growth||Emerging Markets 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 iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
QQQ’s dividend yield is 3.36% lower than that of EMB (0.49% vs. 3.85%). Also, QQQ yielded on average 14.84% more per year over the past decade (21.27% vs. 6.43%). The expense ratio of QQQ is 0.19 percentage points lower than EMB’s (0.2% vs. 0.39%).
|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%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) 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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% 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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
QQQ’s CAGR is 14.84 percentage points higher than that of EMB and as a result, would have yielded $57,227 more on a $10,000 investment. Thus, QQQ outperformed EMB by 14.84% annually.
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