The Invesco QQQ Trust (QQQ) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between QQQ and IWR? And which fund is better?
The expense ratio of QQQ is 0.01 percentage points higher than IWR’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 IWR over the past ten years.
In this article, we’ll compare QQQ vs. IWR. We’ll look at fund composition and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss QQQ’s and IWR’s portfolio growth, risk metrics, and performance and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||iShares Russell Mid-Cap ETF|
|Category||Large Growth||Mid-Cap Blend|
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 Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
QQQ’s dividend yield is 0.50% lower than that of IWR (0.49% vs. 0.99%). Also, QQQ yielded on average 7.12% more per year over the past decade (21.27% vs. 14.15%). The expense ratio of QQQ is 0.01 percentage points higher than IWR’s (0.2% vs. 0.19%).
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 Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
QQQ is 25.79% more exposed to the Technology sector than IWR (45.46% vs 19.67%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 14.91% higher and 3.68% higher respectively (19.55% vs. 4.64% and 17.27% vs. 13.59%). In total, Real Estate, Energy, and Utilities also make up 15.36% less of the fund’s holdings compared to IWR (0.89% vs. 16.25%).
|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%.
|IDEXX Laboratories Inc||0.51%|
|Chipotle Mexican Grill Inc||0.47%|
|Roku Inc Class A||0.44%|
|Marvell Technology Inc||0.44%|
|Trane Technologies PLC||0.43%|
|Carrier Global Corp Ordinary Shares||0.43%|
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
QQQ’s CAGR is 7.12 percentage points higher than that of IWR and as a result, would have yielded $36,771 more on a $10,000 investment. Thus, QQQ outperformed IWR by 7.12% annually.
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