The Invesco QQQ Trust (QQQ) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between QQQ and SDY? And which fund is better?
The expense ratio of QQQ is 0.15 percentage points lower than SDY’s (0.2% vs. 0.35%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than SDY over the past ten years.
In this article, we’ll compare QQQ vs. SDY. We’ll look at fund composition and portfolio growth, as well as at their performance and risk metrics. Moreover, I’ll also discuss QQQ’s and SDY’s industry exposure, holdings, and annual returns and examine how these affect their overall returns.
Summary
| QQQ | SDY | |
| Name | Invesco QQQ Trust | SPDR S&P Dividend ETF |
| Category | Large Growth | Large Value |
| Issuer | Invesco | SPDR State Street Global Advisors |
| AUM | 174.51B | 19.67B |
| Avg. Return | 21.27% | 12.44% |
| Div. Yield | 0.49% | 2.65% |
| Expense Ratio | 0.2% | 0.35% |
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 Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
QQQ’s dividend yield is 2.16% lower than that of SDY (0.49% vs. 2.65%). Also, QQQ yielded on average 8.83% more per year over the past decade (21.27% vs. 12.44%). The expense ratio of QQQ is 0.15 percentage points lower than SDY’s (0.2% vs. 0.35%).
Fund Composition
Industry Exposure
| QQQ | SDY | |
| Technology | 45.46% | 2.0% |
| Industrials | 2.61% | 15.89% |
| Energy | 0.0% | 5.95% |
| Communication Services | 19.55% | 4.64% |
| Utilities | 0.89% | 12.14% |
| Healthcare | 7.04% | 7.35% |
| Consumer Defensive | 4.68% | 14.01% |
| Real Estate | 0.0% | 6.57% |
| Financial Services | 2.51% | 16.32% |
| Consumer Cyclical | 17.27% | 8.68% |
| Basic Materials | 0.0% | 6.45% |
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 Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
QQQ is 43.46% more exposed to the Technology sector than SDY (45.46% vs 2.0%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 14.91% higher and 8.59% higher respectively (19.55% vs. 4.64% and 17.27% vs. 8.68%). In total, Real Estate, Energy, and Utilities also make up 23.77% less of the fund’s holdings compared to SDY (0.89% vs. 24.66%).
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%.
| SDY Holdings | Weight |
| Exxon Mobil Corp | 2.81% |
| AT&T Inc | 2.5% |
| South Jersey Industries Inc | 2.22% |
| Chevron Corp | 2.02% |
| International Business Machines Corp | 2.0% |
| AbbVie Inc | 1.93% |
| National Retail Properties Inc | 1.86% |
| Federal Realty Investment Trust | 1.77% |
| Realty Income Corp | 1.7% |
| Old Republic International Corp | 1.65% |
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
Performance
Annual Returns
| Year | QQQ | SDY |
| 2020 | 48.6% | 1.78% |
| 2019 | 39.12% | 23.37% |
| 2018 | -0.14% | -2.73% |
| 2017 | 32.7% | 15.84% |
| 2016 | 7.01% | 20.17% |
| 2015 | 9.54% | -0.7% |
| 2014 | 19.12% | 13.8% |
| 2013 | 36.6% | 30.09% |
| 2012 | 18.09% | 11.51% |
| 2011 | 3.44% | 7.28% |
| 2010 | 19.89% | 16.41% |
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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $76,522 | 21.27% |
| SDY | $10,000 | $34,806 | 12.44% |
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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.
QQQ’s CAGR is 8.83 percentage points higher than that of SDY and as a result, would have yielded $41,716 more on a $10,000 investment. Thus, QQQ outperformed SDY by 8.83% annually.
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