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QQQ vs. PFF: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between QQQ and PFF? And which fund is better?

The expense ratio of QQQ is 0.26 percentage points lower than PFF’s (0.2% vs. 0.46%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than PFF over the past ten years.

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

Summary

QQQPFF
NameInvesco QQQ TrustiShares Preferred and Income Securities ETF
CategoryLarge GrowthPreferred Stock
IssuerInvescoiShares
AUM174.51B19.8B
Avg. Return21.27%6.90%
Div. Yield0.49%4.47%
Expense Ratio0.2%0.46%

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 Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

QQQ’s dividend yield is 3.98% lower than that of PFF (0.49% vs. 4.47%). Also, QQQ yielded on average 14.37% more per year over the past decade (21.27% vs. 6.90%). The expense ratio of QQQ is 0.26 percentage points lower than PFF’s (0.2% vs. 0.46%).

Fund Composition

Industry Exposure

QQQ vs. PFF - Industry Exposure

QQQPFF
Technology45.46%0.0%
Industrials2.61%10.27%
Energy0.0%0.0%
Communication Services19.55%0.0%
Utilities0.89%81.81%
Healthcare7.04%3.54%
Consumer Defensive4.68%0.0%
Real Estate0.0%0.65%
Financial Services2.51%0.0%
Consumer Cyclical17.27%0.0%
Basic Materials0.0%3.74%

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 Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

QQQ is 45.46% more exposed to the Technology sector than PFF (45.46% vs 0.0%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 19.55% higher and 17.27% higher respectively (19.55% vs. 0.0% and 17.27% vs. 0.0%). In total, Real Estate, Energy, and Utilities also make up 81.57% less of the fund’s holdings compared to PFF (0.89% vs. 82.46%).

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%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

Performance

Annual Returns

QQQ vs. PFF - Annual Returns

YearQQQPFF
202048.6%7.94%
201939.12%15.62%
2018-0.14%-4.77%
201732.7%8.33%
20167.01%1.26%
20159.54%4.62%
201419.12%13.45%
201336.6%-0.59%
201218.09%18.25%
20113.44%-2.2%
201019.89%13.96%

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 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

QQQ vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QQQ$10,000$76,52221.27%
PFF$10,000$20,2726.90%

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 PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

QQQ’s CAGR is 14.37 percentage points higher than that of PFF and as a result, would have yielded $56,250 more on a $10,000 investment. Thus, QQQ outperformed PFF by 14.37% annually.


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