QQQ vs. IEMG: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Core MSCI Emerging Markets ETF (IEMG) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IEMG is a iShares Diversified Emerging Mkts fund. So, what’s the difference between QQQ and IEMG? And which fund is better?

The expense ratio of QQQ is 0.09 percentage points higher than IEMG’s (0.2% vs. 0.11%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than IEMG over the past ten years.

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

Summary

QQQ IEMG
Name Invesco QQQ Trust iShares Core MSCI Emerging Markets ETF
Category Large Growth Diversified Emerging Mkts
Issuer Invesco iShares
AUM 174.51B 83.68B
Avg. Return 21.27% 7.41%
Div. Yield 0.49% 1.78%
Expense Ratio 0.2% 0.11%

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 MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.

QQQ’s dividend yield is 1.29% lower than that of IEMG (0.49% vs. 1.78%). Also, QQQ yielded on average 13.86% more per year over the past decade (21.27% vs. 7.41%). The expense ratio of QQQ is 0.09 percentage points higher than IEMG’s (0.2% vs. 0.11%).

Fund Composition

Industry Exposure

QQQ vs. IEMG - Industry Exposure

QQQ IEMG
Technology 45.46% 20.44%
Industrials 2.61% 5.92%
Energy 0.0% 4.71%
Communication Services 19.55% 11.41%
Utilities 0.89% 2.13%
Healthcare 7.04% 5.73%
Consumer Defensive 4.68% 5.68%
Real Estate 0.0% 2.75%
Financial Services 2.51% 16.9%
Consumer Cyclical 17.27% 15.67%
Basic Materials 0.0% 8.64%

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 MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.

IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.

QQQ is 25.02% more exposed to the Technology sector than IEMG (45.46% vs 20.44%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 8.14% higher and 1.60% higher respectively (19.55% vs. 11.41% and 17.27% vs. 15.67%). In total, Real Estate, Energy, and Utilities also make up 8.70% less of the fund’s holdings compared to IEMG (0.89% vs. 9.59%).

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%.

IEMG - Holdings

IEMG Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 5.37%
Tencent Holdings Ltd 4.42%
Alibaba Group Holding Ltd Ordinary Shares 4.38%
Samsung Electronics Co Ltd 3.49%
Meituan 1.52%
Naspers Ltd Class N 0.93%
Vale SA 0.91%
Reliance Industries Ltd Shs Dematerialised 0.83%
China Construction Bank Corp Class H 0.77%
Infosys Ltd 0.74%

IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.

Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.

Performance

Annual Returns

QQQ vs. IEMG - Annual Returns

Year QQQ IEMG
2020 48.6% 18.18%
2019 39.12% 17.5%
2018 -0.14% -14.69%
2017 32.7% 36.78%
2016 7.01% 9.98%
2015 9.54% -13.86%
2014 19.12% -2.04%
2013 36.6% -2.16%
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 2017 was the strongest year for IEMG, returning 36.78% on an annual basis. The poorest year for IEMG in the last ten years was 2018, with a yield of -14.69%. Most years the iShares Core MSCI Emerging Markets 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. IEMG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $38,251 21.27%
IEMG $10,000 $15,037 7.41%

A $10,000 investment in QQQ would have resulted in a final balance of $38,251. This is a profit of $28,251 over 7 years and amounts to a compound annual growth rate (CAGR) of 21.27%.

With a $10,000 investment in IEMG, the end total would have been $15,037. This equates to a $5,037 profit over 7 years and a compound annual growth rate (CAGR) of 7.41%.

QQQ’s CAGR is 13.86 percentage points higher than that of IEMG and as a result, would have yielded $23,214 more on a $10,000 investment. Thus, QQQ outperformed IEMG by 13.86% annually.


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