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QQQ vs. IWS: What’s The Difference?

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

The expense ratio of QQQ is 0.03 percentage points lower than IWS’s (0.2% vs. 0.23%). QQQ also has a higher exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than IWS over the past ten years.

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

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Summary

QQQIWS
NameInvesco QQQ TrustiShares Russell Mid-Cap Value ETF
CategoryLarge GrowthMid-Cap Value
IssuerInvescoiShares
AUM174.51B14.24B
Avg. Return21.27%12.35%
Div. Yield0.49%1.34%
Expense Ratio0.2%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

QQQ’s dividend yield is 0.85% lower than that of IWS (0.49% vs. 1.34%). Also, QQQ yielded on average 8.92% more per year over the past decade (21.27% vs. 12.35%). The expense ratio of QQQ is 0.03 percentage points lower than IWS’s (0.2% vs. 0.23%).

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Fund Composition

Industry Exposure

QQQ vs. IWS - Industry Exposure

QQQIWS
Technology45.46%11.39%
Industrials2.61%14.6%
Energy0.0%4.71%
Communication Services19.55%4.08%
Utilities0.89%6.97%
Healthcare7.04%8.56%
Consumer Defensive4.68%4.76%
Real Estate0.0%11.71%
Financial Services2.51%15.75%
Consumer Cyclical17.27%12.07%
Basic Materials0.0%5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

QQQ is 34.07% more exposed to the Technology sector than IWS (45.46% vs 11.39%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 15.47% higher and 5.20% higher respectively (19.55% vs. 4.08% and 17.27% vs. 12.07%). In total, Real Estate, Energy, and Utilities also make up 22.50% less of the fund’s holdings compared to IWS (0.89% vs. 23.39%).

Holdings

QQQ - Holdings

QQQ HoldingsWeight
Apple Inc11.0%
Microsoft Corp9.82%
Amazon.com Inc8.35%
Facebook Inc Class A4.01%
Facebook Inc A4.01%
Alphabet Inc Class C3.9%
Tesla Inc3.9%
NVIDIA Corp3.65%
Alphabet Inc Class A3.53%
Alphabet Inc A3.53%

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Performance

Annual Returns

QQQ vs. IWS - Annual Returns

YearQQQIWS
202048.6%4.76%
201939.12%26.78%
2018-0.14%-12.36%
201732.7%13.1%
20167.01%19.69%
20159.54%-4.93%
201419.12%14.49%
201336.6%33.11%
201218.09%18.27%
20113.44%-1.55%
201019.89%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

QQQ vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QQQ$10,000$76,52221.27%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

QQQ’s CAGR is 8.92 percentage points higher than that of IWS and as a result, would have yielded $43,439 more on a $10,000 investment. Thus, QQQ outperformed IWS by 8.92% annually.


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