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QQQ vs. IEF: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IEF is a iShares Long Government fund. So, what’s the difference between QQQ and IEF? And which fund is better?

The expense ratio of QQQ is 0.05 percentage points higher than IEF’s (0.2% vs. 0.15%). QQQ also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than IEF over the past ten years.

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

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Summary

QQQIEF
NameInvesco QQQ TrustiShares 7-10 Year Treasury Bond ETF
CategoryLarge GrowthLong Government
IssuerInvescoiShares
AUM174.51B13.44B
Avg. Return21.27%5.06%
Div. Yield0.49%0.84%
Expense Ratio0.2%0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

QQQ’s dividend yield is 0.35% lower than that of IEF (0.49% vs. 0.84%). Also, QQQ yielded on average 16.21% more per year over the past decade (21.27% vs. 5.06%). The expense ratio of QQQ is 0.05 percentage points higher than IEF’s (0.2% vs. 0.15%).

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Fund Composition

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%.

IEF - Holdings

IEF Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

IEF’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Performance

Annual Returns

QQQ vs. IEF - Annual Returns

YearQQQIEF
202048.6%9.84%
201939.12%8.38%
2018-0.14%0.82%
201732.7%2.47%
20167.01%1.0%
20159.54%1.55%
201419.12%8.92%
201336.6%-6.12%
201218.09%4.06%
20113.44%15.46%
201019.89%9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

QQQ vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QQQ$10,000$76,52221.27%
IEF$10,000$16,9365.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

QQQ’s CAGR is 16.21 percentage points higher than that of IEF and as a result, would have yielded $59,586 more on a $10,000 investment. Thus, QQQ outperformed IEF by 16.21% annually.


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