QQQ vs. VBR: What’s The Difference?

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

The expense ratio of QQQ is 0.13 percentage points higher than VBR’s (0.2% vs. 0.07%). QQQ also has a higher exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than VBR over the past ten years.

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

Summary

QQQ VBR
Name Invesco QQQ Trust Vanguard Small-Cap Value Index Fund ETF Shares
Category Large Growth Small Value
Issuer Invesco Vanguard
AUM 174.51B 48.08B
Avg. Return 21.27% 12.28%
Div. Yield 0.49% 1.6%
Expense Ratio 0.2% 0.07%

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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

QQQ’s dividend yield is 1.11% lower than that of VBR (0.49% vs. 1.6%). Also, QQQ yielded on average 8.99% more per year over the past decade (21.27% vs. 12.28%). The expense ratio of QQQ is 0.13 percentage points higher than VBR’s (0.2% vs. 0.07%).

Fund Composition

Industry Exposure

QQQ vs. VBR - Industry Exposure

QQQ VBR
Technology 45.46% 8.39%
Industrials 2.61% 18.44%
Energy 0.0% 5.15%
Communication Services 19.55% 1.77%
Utilities 0.89% 3.65%
Healthcare 7.04% 7.16%
Consumer Defensive 4.68% 4.36%
Real Estate 0.0% 10.92%
Financial Services 2.51% 20.04%
Consumer Cyclical 17.27% 13.82%
Basic Materials 0.0% 6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

QQQ is 37.07% more exposed to the Technology sector than VBR (45.46% vs 8.39%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 17.78% higher and 3.45% higher respectively (19.55% vs. 1.77% and 17.27% vs. 13.82%). In total, Real Estate, Energy, and Utilities also make up 18.83% less of the fund’s holdings compared to VBR (0.89% vs. 19.72%).

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%.

VBR - Holdings

VBR Holdings Weight
Diamondback Energy Inc 0.55%
VICI Properties Inc Ordinary Shares 0.54%
IDEX Corp 0.54%
Nuance Communications Inc 0.5%
Molina Healthcare Inc 0.48%
Signature Bank 0.46%
Novavax Inc 0.44%
Howmet Aerospace Inc 0.44%
Apollo Global Management Inc Class A 0.42%
Brown & Brown Inc 0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

Performance

Annual Returns

QQQ vs. VBR - Annual Returns

Year QQQ VBR
2020 48.6% 5.82%
2019 39.12% 22.76%
2018 -0.14% -12.22%
2017 32.7% 11.79%
2016 7.01% 24.8%
2015 9.54% -4.67%
2014 19.12% 10.55%
2013 36.6% 36.57%
2012 18.09% 18.78%
2011 3.44% -4.05%
2010 19.89% 24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

QQQ vs. VBR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
VBR $10,000 $32,611 12.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

QQQ’s CAGR is 8.99 percentage points higher than that of VBR and as a result, would have yielded $43,911 more on a $10,000 investment. Thus, QQQ outperformed VBR by 8.99% annually.


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