The Invesco QQQ Trust (QQQ) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and MTUM is a iShares Large Growth fund. So, what’s the difference between QQQ and MTUM? And which fund is better?
The expense ratio of QQQ is 0.05 percentage points higher than MTUM’s (0.2% vs. 0.15%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than MTUM over the past ten years.
In this article, we’ll compare QQQ vs. MTUM. We’ll look at risk metrics and industry exposure, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss QQQ’s and MTUM’s holdings, annual returns, and performance and examine how these affect their overall returns.
Summary
| QQQ | MTUM | |
| NameInvesco QQQ TrustiShares MSCI USA Momentum Factor ETF | ||
| Category | Large Growth | Large Growth |
| Issuer | Invesco | iShares |
| AUM | 174.51B | 14.53B |
| Avg. Return | 21.27% | 17.37% |
| Div. Yield | 0.49% | 0.44% |
| Expense Ratio | 0.2% | 0.15% |
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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.
QQQ’s dividend yield is 0.05% higher than that of MTUM (0.49% vs. 0.44%). Also, QQQ yielded on average 3.90% more per year over the past decade (21.27% vs. 17.37%). The expense ratio of QQQ is 0.05 percentage points higher than MTUM’s (0.2% vs. 0.15%).
Fund Composition
Industry Exposure
| QQQ | MTUM | |
| Technology | 45.46% | 15.24% |
| Industrials | 2.61% | 12.47% |
| Energy | 0.0% | 1.77% |
| Communication Services | 19.55% | 13.18% |
| Utilities | 0.89% | 0.19% |
| Healthcare | 7.04% | 6.41% |
| Consumer Defensive | 4.68% | 2.88% |
| Real Estate | 0.0% | 0.43% |
| Financial Services | 2.51% | 34.32% |
| Consumer Cyclical | 17.27% | 9.96% |
| Basic Materials | 0.0% | 3.15% |
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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.
MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.
QQQ is 30.22% more exposed to the Technology sector than MTUM (45.46% vs 15.24%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 6.37% higher and 7.31% higher respectively (19.55% vs. 13.18% and 17.27% vs. 9.96%). In total, Real Estate, Energy, and Utilities also make up 1.50% less of the fund’s holdings compared to MTUM (0.89% vs. 2.39%).
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%.
| MTUM Holdings | Weight |
| Tesla Inc | 5.63% |
| The Walt Disney Co | 4.39% |
| JPMorgan Chase & Co | 4.35% |
| Berkshire Hathaway Inc Class B | 4.34% |
| Bank of America Corp | 3.81% |
| PayPal Holdings Inc | 3.76% |
| Wells Fargo & Co | 3.05% |
| Applied Materials Inc | 3.05% |
| Moderna Inc | 2.89% |
| Alphabet Inc Class C | 2.84% |
MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.
PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.
Performance
Annual Returns
| Year | QQQ | MTUM |
| 2020 | 48.6% | 29.69% |
| 2019 | 39.12% | 27.57% |
| 2018 | -0.14% | -1.77% |
| 2017 | 32.7% | 37.6% |
| 2016 | 7.01% | 4.89% |
| 2015 | 9.54% | 9.12% |
| 2014 | 19.12% | 14.48% |
| 2013 | 36.6% | 0.0% |
| 2012 | 18.09% | 0.0% |
| 2011 | 3.44% | 0.0% |
| 2010 | 19.89% | 0.0% |
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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $38,251 | 21.27% |
| MTUM | $10,000 | $29,301 | 17.37% |
A $10,000 investment in QQQ would have resulted in a final balance of $38,251. This is a profit of $28,251 over 7 years and amounts to a compound annual growth rate (CAGR) of 21.27%.
With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.
QQQ’s CAGR is 3.90 percentage points higher than that of MTUM and as a result, would have yielded $8,950 more on a $10,000 investment. Thus, QQQ outperformed MTUM by 3.90% annually.
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