The Invesco QQQ Trust (QQQ) and the Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VIG is a Vanguard Large Blend fund. So, what’s the difference between QQQ and VIG? And which fund is better?
The expense ratio of QQQ is 0.14 percentage points higher than VIG’s (0.2% vs. 0.06%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than VIG over the past ten years.
In this article, we’ll compare QQQ vs. VIG. We’ll look at industry exposure and performance, as well as at their annual returns and fund composition. Moreover, I’ll also discuss QQQ’s and VIG’s portfolio growth, risk metrics, and holdings and examine how these affect their overall returns.
Summary
| QQQ | VIG | |
| Name | Invesco QQQ Trust | Vanguard Dividend Appreciation Index Fund ETF Shares |
| Category | Large Growth | Large Blend |
| Issuer | Invesco | Vanguard |
| AUM | 174.51B | 71.92B |
| Avg. Return | 21.27% | 13.35% |
| Div. Yield | 0.49% | 1.56% |
| Expense Ratio | 0.2% | 0.06% |
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 Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
QQQ’s dividend yield is 1.07% lower than that of VIG (0.49% vs. 1.56%). Also, QQQ yielded on average 7.92% more per year over the past decade (21.27% vs. 13.35%). The expense ratio of QQQ is 0.14 percentage points higher than VIG’s (0.2% vs. 0.06%).
Fund Composition
Industry Exposure
| QQQ | VIG | |
| Technology | 45.46% | 14.93% |
| Industrials | 2.61% | 17.23% |
| Energy | 0.0% | 0.0% |
| Communication Services | 19.55% | 2.86% |
| Utilities | 0.89% | 2.81% |
| Healthcare | 7.04% | 15.52% |
| Consumer Defensive | 4.68% | 15.32% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 2.51% | 17.18% |
| Consumer Cyclical | 17.27% | 10.47% |
| Basic Materials | 0.0% | 3.67% |
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 Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
QQQ is 30.53% more exposed to the Technology sector than VIG (45.46% vs 14.93%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 16.69% higher and 6.80% higher respectively (19.55% vs. 2.86% and 17.27% vs. 10.47%). In total, Real Estate, Energy, and Utilities also make up 1.92% less of the fund’s holdings compared to VIG (0.89% vs. 2.81%).
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%.
| VIG Holdings | Weight |
| Microsoft Corp | 4.19% |
| JPMorgan Chase & Co | 3.8% |
| Johnson & Johnson | 3.67% |
| Walmart Inc | 3.38% |
| Visa Inc Class A | 3.22% |
| UnitedHealth Group Inc | 3.22% |
| The Home Depot Inc | 2.91% |
| Procter & Gamble Co | 2.82% |
| Comcast Corp Class A | 2.21% |
| Coca-Cola Co | 1.98% |
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
Performance
Annual Returns
| Year | QQQ | VIG |
| 2020 | 48.6% | 15.46% |
| 2019 | 39.12% | 29.71% |
| 2018 | -0.14% | -2.02% |
| 2017 | 32.7% | 22.22% |
| 2016 | 7.01% | 11.84% |
| 2015 | 9.54% | -1.95% |
| 2014 | 19.12% | 10.06% |
| 2013 | 36.6% | 28.99% |
| 2012 | 18.09% | 11.61% |
| 2011 | 3.44% | 6.21% |
| 2010 | 19.89% | 14.67% |
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 VIG, returning 29.71% on an annual basis. The poorest year for VIG in the last ten years was 2018, with a yield of -2.02%. Most years the Vanguard Dividend Appreciation Index Fund ETF Shares has given investors modest returns, such as in 2012, 2016, and 2010, when gains were 11.61%, 11.84%, and 14.67% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $76,522 | 21.27% |
| VIG | $10,000 | $37,951 | 13.35% |
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 VIG, the end total would have been $37,951. This equates to a $27,951 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.
QQQ’s CAGR is 7.92 percentage points higher than that of VIG and as a result, would have yielded $38,571 more on a $10,000 investment. Thus, QQQ outperformed VIG by 7.92% annually.
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