QQQ vs. IVW: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IVW is a iShares Large Growth fund. So, what’s the difference between QQQ and IVW? And which fund is better?

The expense ratio of QQQ is 0.02 percentage points higher than IVW’s (0.2% vs. 0.18%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than IVW over the past ten years.

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

Summary

QQQ IVW
Name Invesco QQQ Trust iShares S&P 500 Growth ETF
Category Large Growth Large Growth
Issuer Invesco iShares
AUM 174.51B 35.72B
Avg. Return 21.27% 16.74%
Div. Yield 0.49% 0.61%
Expense Ratio 0.2% 0.18%

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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

QQQ’s dividend yield is 0.12% lower than that of IVW (0.49% vs. 0.61%). Also, QQQ yielded on average 4.53% more per year over the past decade (21.27% vs. 16.74%). The expense ratio of QQQ is 0.02 percentage points higher than IVW’s (0.2% vs. 0.18%).

Fund Composition

Industry Exposure

QQQ vs. IVW - Industry Exposure

QQQ IVW
Technology 45.46% 37.8%
Industrials 2.61% 5.72%
Energy 0.0% 0.06%
Communication Services 19.55% 15.44%
Utilities 0.89% 0.47%
Healthcare 7.04% 11.88%
Consumer Defensive 4.68% 3.84%
Real Estate 0.0% 1.11%
Financial Services 2.51% 6.78%
Consumer Cyclical 17.27% 15.25%
Basic Materials 0.0% 1.65%

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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

QQQ is 7.66% more exposed to the Technology sector than IVW (45.46% vs 37.8%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 4.11% higher and 2.02% higher respectively (19.55% vs. 15.44% and 17.27% vs. 15.25%). In total, Real Estate, Energy, and Utilities also make up 0.75% less of the fund’s holdings compared to IVW (0.89% vs. 1.64%).

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%.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

Performance

Annual Returns

QQQ vs. IVW - Annual Returns

Year QQQ IVW
2020 48.6% 33.21%
2019 39.12% 30.91%
2018 -0.14% -0.17%
2017 32.7% 27.2%
2016 7.01% 6.74%
2015 9.54% 5.33%
2014 19.12% 14.67%
2013 36.6% 32.48%
2012 18.09% 14.39%
2011 3.44% 4.49%
2010 19.89% 14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

QQQ vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
IVW $10,000 $51,915 16.74%

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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.

QQQ’s CAGR is 4.53 percentage points higher than that of IVW and as a result, would have yielded $24,607 more on a $10,000 investment. Thus, QQQ outperformed IVW by 4.53% annually.


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