The Invesco QQQ Trust (QQQ) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IUSB is a iShares N/A fund. So, what’s the difference between QQQ and IUSB? And which fund is better?
The expense ratio of QQQ is 0.14 percentage points higher than IUSB’s (0.2% vs. 0.06%). QQQ also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare QQQ vs. IUSB. We’ll look at industry exposure and portfolio growth, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss QQQ’s and IUSB’s holdings, fund composition, and performance and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||iShares Core Total USD Bond Market ETF|
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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
QQQ’s dividend yield is 1.61% lower than that of IUSB (0.49% vs. 2.1%). Also, QQQ yielded on average 17.14% more per year over the past decade (21.27% vs. 4.13%). The expense ratio of QQQ is 0.14 percentage points higher than IUSB’s (0.2% vs. 0.06%).
|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%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) 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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in QQQ would have resulted in a final balance of $32,112. This is a profit of $22,112 over 6 years and amounts to a compound annual growth rate (CAGR) of 21.27%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
QQQ’s CAGR is 17.14 percentage points higher than that of IUSB and as a result, would have yielded $19,408 more on a $10,000 investment. Thus, QQQ outperformed IUSB by 17.14% annually.
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