QQQ vs. IWD: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IWD is a iShares Large Value fund. So, what’s the difference between QQQ and IWD? And which fund is better?

The expense ratio of QQQ is 0.01 percentage points higher than IWD’s (0.2% vs. 0.19%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than IWD over the past ten years.

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

Summary

QQQ IWD
Name Invesco QQQ Trust iShares Russell 1000 Value ETF
Category Large Growth Large Value
Issuer Invesco iShares
AUM 174.51B 54.1B
Avg. Return 21.27% 11.40%
Div. Yield 0.49% 1.57%
Expense Ratio 0.2% 0.19%

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 Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

QQQ’s dividend yield is 1.08% lower than that of IWD (0.49% vs. 1.57%). Also, QQQ yielded on average 9.87% more per year over the past decade (21.27% vs. 11.40%). The expense ratio of QQQ is 0.01 percentage points higher than IWD’s (0.2% vs. 0.19%).

Fund Composition

Industry Exposure

QQQ vs. IWD - Industry Exposure

QQQ IWD
Technology 45.46% 10.28%
Industrials 2.61% 11.77%
Energy 0.0% 4.76%
Communication Services 19.55% 8.67%
Utilities 0.89% 4.88%
Healthcare 7.04% 17.78%
Consumer Defensive 4.68% 7.76%
Real Estate 0.0% 4.94%
Financial Services 2.51% 20.43%
Consumer Cyclical 17.27% 5.62%
Basic Materials 0.0% 3.1%

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 Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

QQQ is 35.18% more exposed to the Technology sector than IWD (45.46% vs 10.28%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 10.88% higher and 11.65% higher respectively (19.55% vs. 8.67% and 17.27% vs. 5.62%). In total, Real Estate, Energy, and Utilities also make up 13.69% less of the fund’s holdings compared to IWD (0.89% vs. 14.58%).

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%.

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

Performance

Annual Returns

QQQ vs. IWD - Annual Returns

Year QQQ IWD
2020 48.6% 2.67%
2019 39.12% 26.34%
2018 -0.14% -8.4%
2017 32.7% 13.47%
2016 7.01% 17.09%
2015 9.54% -3.95%
2014 19.12% 13.21%
2013 36.6% 32.18%
2012 18.09% 17.28%
2011 3.44% 0.21%
2010 19.89% 15.3%

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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% respectively.

Portfolio Growth

QQQ vs. IWD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
IWD $10,000 $30,746 11.40%

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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.

QQQ’s CAGR is 9.87 percentage points higher than that of IWD and as a result, would have yielded $45,776 more on a $10,000 investment. Thus, QQQ outperformed IWD by 9.87% annually.


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