The Invesco QQQ Trust (QQQ) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between QQQ and TLT? And which fund is better?
The expense ratio of QQQ is 0.05 percentage points higher than TLT’s (0.2% vs. 0.15%). QQQ also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than TLT over the past ten years.
In this article, we’ll compare QQQ vs. TLT. We’ll look at annual returns and holdings, as well as at their risk metrics and performance. Moreover, I’ll also discuss QQQ’s and TLT’s portfolio growth, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||iShares 20+ Year Treasury Bond ETF|
|Category||Large Growth||Long Government|
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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
QQQ’s dividend yield is 1.01% lower than that of TLT (0.49% vs. 1.5%). Also, QQQ yielded on average 12.27% more per year over the past decade (21.27% vs. 9.00%). The expense ratio of QQQ is 0.05 percentage points higher than TLT’s (0.2% vs. 0.15%).
|Facebook Inc Class A||4.01%|
|Facebook Inc A||4.01%|
|Alphabet Inc Class C||3.9%|
|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%.
|TLT Bond Sectors||Weight|
TLT’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.
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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
QQQ’s CAGR is 12.27 percentage points higher than that of TLT and as a result, would have yielded $52,713 more on a $10,000 investment. Thus, QQQ outperformed TLT by 12.27% annually.
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