QQQ vs. VGT: What’s The Difference?

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

The expense ratio of QQQ is 0.10 percentage points higher than VGT’s (0.2% vs. 0.1%). QQQ also has a lower exposure to the technology sector and a lower standard deviation. Overall, QQQ has provided higher returns than VGT over the past ten years.

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

Summary

QQQ VGT
Name Invesco QQQ Trust Vanguard Information Technology Index Fund ETF Shares
Category Large Growth Technology
Issuer Invesco Vanguard
AUM 174.51B 54.13B
Avg. Return 21.27% 20.84%
Div. Yield 0.49% 0.66%
Expense Ratio 0.2% 0.1%

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 Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

QQQ’s dividend yield is 0.17% lower than that of VGT (0.49% vs. 0.66%). Also, QQQ yielded on average 0.43% more per year over the past decade (21.27% vs. 20.84%). The expense ratio of QQQ is 0.10 percentage points higher than VGT’s (0.2% vs. 0.1%).

Fund Composition

Industry Exposure

QQQ vs. VGT - Industry Exposure

QQQ VGT
Technology 45.46% 88.89%
Industrials 2.61% 1.67%
Energy 0.0% 0.0%
Communication Services 19.55% 0.61%
Utilities 0.89% 0.0%
Healthcare 7.04% 0.0%
Consumer Defensive 4.68% 0.0%
Real Estate 0.0% 0.0%
Financial Services 2.51% 8.83%
Consumer Cyclical 17.27% 0.0%
Basic Materials 0.0% 0.0%

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 Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

QQQ is 43.43% less exposed to the Technology sector than VGT (45.46% vs 88.89%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 18.94% higher and 17.27% higher respectively (19.55% vs. 0.61% and 17.27% vs. 0.0%). In total, Real Estate, Energy, and Utilities also make up 0.89% more of the fund’s holdings compared to VGT (0.89% vs. 0.00%).

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%.

VGT - Holdings

VGT Holdings Weight
Apple Inc 19.58%
Microsoft Corp 16.53%
NVIDIA Corp 4.22%
Visa Inc Class A 3.16%
PayPal Holdings Inc 2.76%
Mastercard Inc Class A 2.76%
Adobe Inc 2.39%
Intel Corp 1.94%
Salesforce.com Inc 1.91%
Cisco Systems Inc 1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

Performance

Annual Returns

QQQ vs. VGT - Annual Returns

Year QQQ VGT
2020 48.6% 45.94%
2019 39.12% 48.68%
2018 -0.14% 2.52%
2017 32.7% 37.07%
2016 7.01% 13.73%
2015 9.54% 5.02%
2014 19.12% 18.01%
2013 36.6% 30.91%
2012 18.09% 14.05%
2011 3.44% 0.52%
2010 19.89% 12.74%

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 2019 was the strongest year for VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% respectively.

Portfolio Growth

QQQ vs. VGT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
VGT $10,000 $72,718 20.84%

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 VGT, the end total would have been $72,718. This equates to a $62,718 profit over 11 years and a compound annual growth rate (CAGR) of 20.84%.

QQQ’s CAGR is 0.43 percentage points higher than that of VGT and as a result, would have yielded $3,804 more on a $10,000 investment. Thus, QQQ outperformed VGT by 0.43% annually.


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