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QQQ vs. VB: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VB is a Vanguard Small Blend fund. So, what’s the difference between QQQ and VB? And which fund is better?

The expense ratio of QQQ is 0.15 percentage points higher than VB’s (0.2% vs. 0.05%). QQQ also has a higher exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than VB over the past ten years.

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

Summary

QQQVB
NameInvesco QQQ TrustVanguard Small-Cap Index Fund ETF Shares
CategoryLarge GrowthSmall Blend
IssuerInvescoVanguard
AUM174.51B137.72B
Avg. Return21.27%14.25%
Div. Yield0.49%1.14%
Expense Ratio0.2%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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.

QQQ’s dividend yield is 0.65% lower than that of VB (0.49% vs. 1.14%). Also, QQQ yielded on average 7.02% more per year over the past decade (21.27% vs. 14.25%). The expense ratio of QQQ is 0.15 percentage points higher than VB’s (0.2% vs. 0.05%).

Fund Composition

Industry Exposure

QQQ vs. VB - Industry Exposure

QQQVB
Technology45.46%16.85%
Industrials2.61%16.11%
Energy0.0%3.67%
Communication Services19.55%2.4%
Utilities0.89%2.19%
Healthcare7.04%14.34%
Consumer Defensive4.68%4.14%
Real Estate0.0%9.56%
Financial Services2.51%13.06%
Consumer Cyclical17.27%13.03%
Basic Materials0.0%4.63%

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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.

VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.

QQQ is 28.61% more exposed to the Technology sector than VB (45.46% vs 16.85%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 17.15% higher and 4.24% higher respectively (19.55% vs. 2.4% and 17.27% vs. 13.03%). In total, Real Estate, Energy, and Utilities also make up 14.53% less of the fund’s holdings compared to VB (0.89% vs. 15.42%).

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%.

VB - Holdings

VB HoldingsWeight
Charles River Laboratories International Inc0.34%
Pool Corp0.32%
Bio-Techne Corp0.32%
Avantor Inc0.32%
PerkinElmer Inc0.31%
Diamondback Energy Inc0.31%
VICI Properties Inc Ordinary Shares0.3%
IDEX Corp0.3%
Entegris Inc0.3%
Novavax Inc0.29%

VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.

Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.

Performance

Annual Returns

QQQ vs. VB - Annual Returns

YearQQQVB
202048.6%19.08%
201939.12%27.37%
2018-0.14%-9.3%
201732.7%16.24%
20167.01%18.31%
20159.54%-3.65%
201419.12%7.51%
201336.6%37.8%
201218.09%18.22%
20113.44%-2.68%
201019.89%27.89%

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 VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.

Portfolio Growth

QQQ vs. VB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
QQQ$10,000$76,52221.27%
VB$10,000$39,73414.25%

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 VB, the end total would have been $39,734. This equates to a $29,734 profit over 11 years and a compound annual growth rate (CAGR) of 14.25%.

QQQ’s CAGR is 7.02 percentage points higher than that of VB and as a result, would have yielded $36,788 more on a $10,000 investment. Thus, QQQ outperformed VB by 7.02% annually.


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