The Invesco QQQ Trust (QQQ) and the Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VEA is a Vanguard Foreign Large Blend fund. So, what’s the difference between QQQ and VEA? And which fund is better?
The expense ratio of QQQ is 0.15 percentage points higher than VEA’s (0.2% vs. 0.05%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than VEA over the past ten years.
In this article, we’ll compare QQQ vs. VEA. We’ll look at annual returns and fund composition, as well as at their industry exposure and performance. Moreover, I’ll also discuss QQQ’s and VEA’s portfolio growth, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| QQQ | VEA | |
| Name | Invesco QQQ Trust | Vanguard FTSE Developed Markets Index Fund ETF Shares |
| Category | Large Growth | Foreign Large Blend |
| Issuer | Invesco | Vanguard |
| AUM | 174.51B | 157.48B |
| Avg. Return | 21.27% | 7.05% |
| Div. Yield | 0.49% | 2.49% |
| 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 Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% with an expense ratio of 0.05%.
QQQ’s dividend yield is 2.00% lower than that of VEA (0.49% vs. 2.49%). Also, QQQ yielded on average 14.22% more per year over the past decade (21.27% vs. 7.05%). The expense ratio of QQQ is 0.15 percentage points higher than VEA’s (0.2% vs. 0.05%).
Fund Composition
Industry Exposure
| QQQ | VEA | |
| Technology | 45.46% | 11.67% |
| Industrials | 2.61% | 15.47% |
| Energy | 0.0% | 4.17% |
| Communication Services | 19.55% | 5.41% |
| Utilities | 0.89% | 3.1% |
| Healthcare | 7.04% | 10.6% |
| Consumer Defensive | 4.68% | 8.61% |
| Real Estate | 0.0% | 4.04% |
| Financial Services | 2.51% | 17.39% |
| Consumer Cyclical | 17.27% | 11.31% |
| Basic Materials | 0.0% | 8.24% |
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 FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.
VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.
QQQ is 33.79% more exposed to the Technology sector than VEA (45.46% vs 11.67%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 14.14% higher and 5.96% higher respectively (19.55% vs. 5.41% and 17.27% vs. 11.31%). In total, Real Estate, Energy, and Utilities also make up 10.42% less of the fund’s holdings compared to VEA (0.89% vs. 11.31%).
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%.
| VEA Holdings | Weight |
| Nestle SA | 1.5% |
| Samsung Electronics Co Ltd | 1.4% |
| ASML Holding NV | 1.16% |
| Roche Holding AG | 1.1% |
| Toyota Motor Corp | 0.92% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.84% |
| Novartis AG | 0.82% |
| Shopify Inc A | 0.7% |
| AstraZeneca PLC | 0.67% |
| SAP SE | 0.66% |
VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.
LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.
Performance
Annual Returns
| Year | QQQ | VEA |
| 2020 | 48.6% | 10.29% |
| 2019 | 39.12% | 22.08% |
| 2018 | -0.14% | -14.47% |
| 2017 | 32.7% | 26.44% |
| 2016 | 7.01% | 2.51% |
| 2015 | 9.54% | -0.21% |
| 2014 | 19.12% | -5.71% |
| 2013 | 36.6% | 22.12% |
| 2012 | 18.09% | 18.6% |
| 2011 | 3.44% | -12.57% |
| 2010 | 19.89% | 8.47% |
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 2017 was the strongest year for VEA, returning 26.44% on an annual basis. The poorest year for VEA in the last ten years was 2018, with a yield of -14.47%. Most years the Vanguard FTSE Developed Markets Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.51%, 8.47%, and 10.29% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $76,522 | 21.27% |
| VEA | $10,000 | $19,290 | 7.05% |
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 VEA, the end total would have been $19,290. This equates to a $9,290 profit over 11 years and a compound annual growth rate (CAGR) of 7.05%.
QQQ’s CAGR is 14.22 percentage points higher than that of VEA and as a result, would have yielded $57,232 more on a $10,000 investment. Thus, QQQ outperformed VEA by 14.22% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
