The Invesco QQQ Trust (QQQ) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between QQQ and MDY? And which fund is better?
The expense ratio of QQQ is 0.03 percentage points lower than MDY’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 MDY over the past ten years.
In this article, we’ll compare QQQ vs. MDY. We’ll look at industry exposure and risk metrics, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss QQQ’s and MDY’s annual returns, fund composition, and performance and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Large Growth||Mid-Cap Blend|
|Issuer||Invesco||SPDR State Street Global Advisors|
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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.
QQQ’s dividend yield is 0.45% lower than that of MDY (0.49% vs. 0.94%). Also, QQQ yielded on average 7.98% more per year over the past decade (21.27% vs. 13.29%). The expense ratio of QQQ is 0.03 percentage points lower than MDY’s (0.2% vs. 0.23%).
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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.
MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.
QQQ is 30.72% more exposed to the Technology sector than MDY (45.46% vs 14.74%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 17.92% higher and 2.38% higher respectively (19.55% vs. 1.63% and 17.27% vs. 14.89%). In total, Real Estate, Energy, and Utilities also make up 14.13% less of the fund’s holdings compared to MDY (0.89% vs. 15.02%).
|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%.
|Molina Healthcare Inc||0.63%|
|Fair Isaac Corp||0.62%|
|XPO Logistics Inc||0.61%|
|SolarEdge Technologies Inc||0.61%|
|Camden Property Trust||0.55%|
|FactSet Research Systems Inc||0.54%|
MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.
SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.
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 MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% 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 MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.
QQQ’s CAGR is 7.98 percentage points higher than that of MDY and as a result, would have yielded $39,998 more on a $10,000 investment. Thus, QQQ outperformed MDY by 7.98% annually.
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