QQQ vs. SCHD: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between QQQ and SCHD? And which fund is better?

The expense ratio of QQQ is 0.14 percentage points higher than SCHD’s (0.2% vs. 0.06%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than SCHD over the past ten years.

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

Summary

QQQ SCHD
Name Invesco QQQ Trust Schwab U.S. Dividend Equity ETF
Category Large Growth Large Value
Issuer Invesco Schwab ETFs
AUM 174.51B 26B
Avg. Return 21.27% 14.80%
Div. Yield 0.49% 2.89%
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 Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.

QQQ’s dividend yield is 2.40% lower than that of SCHD (0.49% vs. 2.89%). Also, QQQ yielded on average 6.47% more per year over the past decade (21.27% vs. 14.80%). The expense ratio of QQQ is 0.14 percentage points higher than SCHD’s (0.2% vs. 0.06%).

Fund Composition

Industry Exposure

QQQ vs. SCHD - Industry Exposure

QQQ SCHD
Technology 45.46% 16.26%
Industrials 2.61% 18.05%
Energy 0.0% 1.87%
Communication Services 19.55% 4.96%
Utilities 0.89% 0.0%
Healthcare 7.04% 12.64%
Consumer Defensive 4.68% 14.04%
Real Estate 0.0% 0.0%
Financial Services 2.51% 21.69%
Consumer Cyclical 17.27% 8.36%
Basic Materials 0.0% 2.13%

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 Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

QQQ is 29.20% more exposed to the Technology sector than SCHD (45.46% vs 16.26%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 14.59% higher and 8.91% higher respectively (19.55% vs. 4.96% and 17.27% vs. 8.36%). In total, Real Estate, Energy, and Utilities also make up 0.98% less of the fund’s holdings compared to SCHD (0.89% vs. 1.87%).

Holdings

QQQ - 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%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

Performance

Annual Returns

QQQ vs. SCHD - Annual Returns

Year QQQ SCHD
2020 48.6% 15.11%
2019 39.12% 27.28%
2018 -0.14% -5.46%
2017 32.7% 20.88%
2016 7.01% 16.25%
2015 9.54% -0.21%
2014 19.12% 11.66%
2013 36.6% 32.9%
2012 18.09% 11.4%
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 2013 was the strongest year for SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% respectively.

Portfolio Growth

QQQ vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $52,252 21.27%
SCHD $10,000 $28,823 14.80%

A $10,000 investment in QQQ would have resulted in a final balance of $52,252. This is a profit of $42,252 over 8 years and amounts to a compound annual growth rate (CAGR) of 21.27%.

With a $10,000 investment in SCHD, the end total would have been $28,823. This equates to a $18,823 profit over 8 years and a compound annual growth rate (CAGR) of 14.80%.

QQQ’s CAGR is 6.47 percentage points higher than that of SCHD and as a result, would have yielded $23,429 more on a $10,000 investment. Thus, QQQ outperformed SCHD by 6.47% annually.


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