The Invesco QQQ Trust (QQQ) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between QQQ and MBB? And which fund is better?
The expense ratio of QQQ is 0.14 percentage points higher than MBB’s (0.2% vs. 0.06%). QQQ also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than MBB over the past ten years.
In this article, we’ll compare QQQ vs. MBB. We’ll look at portfolio growth and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss QQQ’s and MBB’s annual returns, industry exposure, and risk metrics and examine how these affect their overall returns.
Summary
| QQQ | MBB | |
| NameInvesco QQQ TrustiShares MBS ETF | ||
| Category | Large Growth | Intermediate Government |
| Issuer | Invesco | iShares |
| AUM | 174.51B | 25.69B |
| Avg. Return | 21.27% | 3.08% |
| Div. Yield | 0.49% | 1.88% |
| Expense Ratio | 0.2% | 0.06% |
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
QQQ’s dividend yield is 1.39% lower than that of MBB (0.49% vs. 1.88%). Also, QQQ yielded on average 18.19% more per year over the past decade (21.27% vs. 3.08%). The expense ratio of QQQ is 0.14 percentage points higher than MBB’s (0.2% vs. 0.06%).
Fund Composition
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%.
| MBB Bond Sectors | Weight |
| AAA | 99.51% |
| Others | 0.49% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Performance
Annual Returns
| Year | QQQ | MBB |
| 2020 | 48.6% | 4.03% |
| 2019 | 39.12% | 6.27% |
| 2018 | -0.14% | 0.81% |
| 2017 | 32.7% | 2.37% |
| 2016 | 7.01% | 1.28% |
| 2015 | 9.54% | 1.28% |
| 2014 | 19.12% | 6.16% |
| 2013 | 36.6% | -1.92% |
| 2012 | 18.09% | 2.23% |
| 2011 | 3.44% | 5.88% |
| 2010 | 19.89% | 5.44% |
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 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $76,522 | 21.27% |
| MBB | $10,000 | $13,906 | 3.08% |
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 MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
QQQ’s CAGR is 18.19 percentage points higher than that of MBB and as a result, would have yielded $62,616 more on a $10,000 investment. Thus, QQQ outperformed MBB by 18.19% annually.
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