The Invesco QQQ Trust (QQQ) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VHT is a Vanguard Health fund. So, what’s the difference between QQQ and VHT? And which fund is better?
The expense ratio of QQQ is 0.10 percentage points higher than VHT’s (0.2% vs. 0.1%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than VHT over the past ten years.
In this article, we’ll compare QQQ vs. VHT. We’ll look at industry exposure and performance, as well as at their holdings and fund composition. Moreover, I’ll also discuss QQQ’s and VHT’s risk metrics, annual returns, and portfolio growth and examine how these affect their overall returns.
Summary
| QQQ | VHT | |
| NameInvesco QQQ TrustVanguard Health Care Index Fund ETF Shares | ||
| Category | Large Growth | Health |
| Issuer | Invesco | Vanguard |
| AUM | 174.51B | 17.94B |
| Avg. Return | 21.27% | 16.04% |
| Div. Yield | 0.49% | 1.15% |
| 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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
QQQ’s dividend yield is 0.66% lower than that of VHT (0.49% vs. 1.15%). Also, QQQ yielded on average 5.23% more per year over the past decade (21.27% vs. 16.04%). The expense ratio of QQQ is 0.10 percentage points higher than VHT’s (0.2% vs. 0.1%).
Fund Composition
Industry Exposure
| QQQ | VHT | |
| Technology | 45.46% | 0.05% |
| Industrials | 2.61% | 0.05% |
| Energy | 0.0% | 0.0% |
| Communication Services | 19.55% | 0.0% |
| Utilities | 0.89% | 0.0% |
| Healthcare | 7.04% | 99.57% |
| Consumer Defensive | 4.68% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 2.51% | 0.02% |
| Consumer Cyclical | 17.27% | 0.0% |
| Basic Materials | 0.0% | 0.31% |
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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
QQQ is 45.41% more exposed to the Technology sector than VHT (45.46% vs 0.05%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 19.55% higher and 17.27% higher respectively (19.55% vs. 0.0% 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 VHT (0.89% vs. 0.00%).
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%.
| VHT Holdings | Weight |
| Johnson & Johnson | 7.34% |
| UnitedHealth Group Inc | 6.44% |
| Pfizer Inc | 3.7% |
| Abbott Laboratories | 3.48% |
| Thermo Fisher Scientific Inc | 3.37% |
| AbbVie Inc | 3.37% |
| Merck & Co Inc | 3.33% |
| Eli Lilly and Co | 3.17% |
| Danaher Corp | 2.91% |
| Medtronic PLC | 2.83% |
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
Performance
Annual Returns
| Year | QQQ | VHT |
| 2020 | 48.6% | 18.21% |
| 2019 | 39.12% | 21.97% |
| 2018 | -0.14% | 5.55% |
| 2017 | 32.7% | 23.34% |
| 2016 | 7.01% | -3.33% |
| 2015 | 9.54% | 7.22% |
| 2014 | 19.12% | 25.38% |
| 2013 | 36.6% | 42.67% |
| 2012 | 18.09% | 19.1% |
| 2011 | 3.44% | 10.57% |
| 2010 | 19.89% | 5.75% |
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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $76,522 | 21.27% |
| VHT | $10,000 | $48,464 | 16.04% |
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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
QQQ’s CAGR is 5.23 percentage points higher than that of VHT and as a result, would have yielded $28,058 more on a $10,000 investment. Thus, QQQ outperformed VHT by 5.23% annually.
