QQQ vs. IJR: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IJR is a iShares Small Blend fund. So, what’s the difference between QQQ and IJR? And which fund is better?

The expense ratio of QQQ is 0.14 percentage points higher than IJR’s (0.2% vs. 0.06%). QQQ also has a higher exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than IJR over the past ten years.

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

Summary

QQQ IJR
Name Invesco QQQ Trust iShares Core S&P Small-Cap ETF
Category Large Growth Small Blend
Issuer Invesco iShares
AUM 174.51B 68.64B
Avg. Return 21.27% 13.97%
Div. Yield 0.49% 0.96%
Expense Ratio 0.2% 0.06%

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 S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

QQQ’s dividend yield is 0.47% lower than that of IJR (0.49% vs. 0.96%). Also, QQQ yielded on average 7.30% more per year over the past decade (21.27% vs. 13.97%). The expense ratio of QQQ is 0.14 percentage points higher than IJR’s (0.2% vs. 0.06%).

Fund Composition

Industry Exposure

QQQ vs. IJR - Industry Exposure

QQQ IJR
Technology 45.46% 14.32%
Industrials 2.61% 17.31%
Energy 0.0% 4.0%
Communication Services 19.55% 2.59%
Utilities 0.89% 1.8%
Healthcare 7.04% 11.55%
Consumer Defensive 4.68% 4.01%
Real Estate 0.0% 9.55%
Financial Services 2.51% 15.91%
Consumer Cyclical 17.27% 13.61%
Basic Materials 0.0% 5.34%

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 S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

QQQ is 31.14% more exposed to the Technology sector than IJR (45.46% vs 14.32%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 16.96% higher and 3.66% higher respectively (19.55% vs. 2.59% and 17.27% vs. 13.61%). In total, Real Estate, Energy, and Utilities also make up 14.46% less of the fund’s holdings compared to IJR (0.89% vs. 15.35%).

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%.

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

Performance

Annual Returns

QQQ vs. IJR - Annual Returns

Year QQQ IJR
2020 48.6% 11.24%
2019 39.12% 22.79%
2018 -0.14% -8.43%
2017 32.7% 13.2%
2016 7.01% 26.49%
2015 9.54% -2.0%
2014 19.12% 5.67%
2013 36.6% 41.36%
2012 18.09% 16.28%
2011 3.44% 0.9%
2010 19.89% 26.14%

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 IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% respectively.

Portfolio Growth

QQQ vs. IJR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
IJR $10,000 $38,800 13.97%

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 IJR, the end total would have been $38,800. This equates to a $28,800 profit over 11 years and a compound annual growth rate (CAGR) of 13.97%.

QQQ’s CAGR is 7.30 percentage points higher than that of IJR and as a result, would have yielded $37,722 more on a $10,000 investment. Thus, QQQ outperformed IJR by 7.30% annually.


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