The Invesco QQQ Trust (QQQ) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between QQQ and SCHP? And which fund is better?
The expense ratio of QQQ is 0.15 percentage points higher than SCHP’s (0.2% vs. 0.05%). QQQ also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare QQQ vs. SCHP. We’ll look at risk metrics and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss QQQ’s and SCHP’s holdings, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| QQQ | SCHP | |
| Name | Invesco QQQ Trust | Schwab U.S. TIPS ETF |
| Category | Large Growth | Inflation-Protected Bond |
| Issuer | Invesco | Schwab ETFs |
| AUM | 174.51B | 18.41B |
| Avg. Return | 21.27% | 3.92% |
| Div. Yield | 0.49% | 1.97% |
| Expense Ratio | 0.2% | 0.05% |
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. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
QQQ’s dividend yield is 1.48% lower than that of SCHP (0.49% vs. 1.97%). Also, QQQ yielded on average 17.36% more per year over the past decade (21.27% vs. 3.92%). The expense ratio of QQQ is 0.15 percentage points higher than SCHP’s (0.2% vs. 0.05%).
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%.
| SCHP Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 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 | SCHP |
| 2020 | 48.6% | 10.94% |
| 2019 | 39.12% | 8.36% |
| 2018 | -0.14% | -1.31% |
| 2017 | 32.7% | 2.95% |
| 2016 | 7.01% | 4.6% |
| 2015 | 9.54% | -1.5% |
| 2014 | 19.12% | 3.56% |
| 2013 | 36.6% | -8.66% |
| 2012 | 18.09% | 6.83% |
| 2011 | 3.44% | 13.38% |
| 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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $63,827 | 21.27% |
| SCHP | $10,000 | $14,418 | 3.92% |
A $10,000 investment in QQQ would have resulted in a final balance of $63,827. This is a profit of $53,827 over 10 years and amounts to a compound annual growth rate (CAGR) of 21.27%.
With a $10,000 investment in SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
QQQ’s CAGR is 17.36 percentage points higher than that of SCHP and as a result, would have yielded $49,409 more on a $10,000 investment. Thus, QQQ outperformed SCHP by 17.36% annually.
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