QQQ vs. IWN: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IWN is a iShares Small Value fund. So, what’s the difference between QQQ and IWN? And which fund is better?

The expense ratio of QQQ is 0.04 percentage points lower than IWN’s (0.2% vs. 0.24%). QQQ also has a higher exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than IWN over the past ten years.

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

Summary

QQQ IWN
Name Invesco QQQ Trust iShares Russell 2000 Value ETF
Category Large Growth Small Value
Issuer Invesco iShares
AUM 174.51B 15.48B
Avg. Return 21.27% 10.96%
Div. Yield 0.49% 1.26%
Expense Ratio 0.2% 0.24%

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 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

QQQ’s dividend yield is 0.77% lower than that of IWN (0.49% vs. 1.26%). Also, QQQ yielded on average 10.31% more per year over the past decade (21.27% vs. 10.96%). The expense ratio of QQQ is 0.04 percentage points lower than IWN’s (0.2% vs. 0.24%).

Fund Composition

Industry Exposure

QQQ vs. IWN - Industry Exposure

QQQ IWN
Technology 45.46% 6.02%
Industrials 2.61% 14.58%
Energy 0.0% 5.84%
Communication Services 19.55% 4.17%
Utilities 0.89% 4.69%
Healthcare 7.04% 10.94%
Consumer Defensive 4.68% 3.77%
Real Estate 0.0% 14.36%
Financial Services 2.51% 22.97%
Consumer Cyclical 17.27% 8.39%
Basic Materials 0.0% 4.29%

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 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

QQQ is 39.44% more exposed to the Technology sector than IWN (45.46% vs 6.02%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 15.38% higher and 8.88% higher respectively (19.55% vs. 4.17% and 17.27% vs. 8.39%). In total, Real Estate, Energy, and Utilities also make up 24.00% less of the fund’s holdings compared to IWN (0.89% vs. 24.89%).

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%.

IWN - Holdings

IWN Holdings Weight
AMC Entertainment Holdings Inc Class A 1.06%
Tenet Healthcare Corp 0.47%
Stag Industrial Inc 0.47%
Ovintiv Inc 0.45%
EMCOR Group Inc 0.42%
Valley National Bancorp 0.37%
Chesapeake Energy Corp Ordinary Shares – New 0.37%
Agree Realty Corp 0.36%
Macy’s Inc 0.35%
Essent Group Ltd 0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

Performance

Annual Returns

QQQ vs. IWN - Annual Returns

Year QQQ IWN
2020 48.6% 4.5%
2019 39.12% 22.17%
2018 -0.14% -12.94%
2017 32.7% 7.73%
2016 7.01% 31.64%
2015 9.54% -7.53%
2014 19.12% 4.13%
2013 36.6% 34.3%
2012 18.09% 17.92%
2011 3.44% -5.64%
2010 19.89% 24.29%

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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

QQQ vs. IWN - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
IWN $10,000 $28,189 10.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

QQQ’s CAGR is 10.31 percentage points higher than that of IWN and as a result, would have yielded $48,333 more on a $10,000 investment. Thus, QQQ outperformed IWN by 10.31% annually.


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