QQQ vs. VLUE: What’s The Difference?

The Invesco QQQ Trust (QQQ) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VLUE is a iShares Large Value fund. So, what’s the difference between QQQ and VLUE? And which fund is better?

The expense ratio of QQQ is 0.05 percentage points higher than VLUE’s (0.2% vs. 0.15%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than VLUE over the past ten years.

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

Summary

QQQ VLUE
Name Invesco QQQ Trust iShares MSCI USA Value Factor ETF
Category Large Growth Large Value
Issuer Invesco iShares
AUM 174.51B 15.95B
Avg. Return 21.27% 8.91%
Div. Yield 0.49% 1.89%
Expense Ratio 0.2% 0.15%

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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

QQQ’s dividend yield is 1.40% lower than that of VLUE (0.49% vs. 1.89%). Also, QQQ yielded on average 12.36% more per year over the past decade (21.27% vs. 8.91%). The expense ratio of QQQ is 0.05 percentage points higher than VLUE’s (0.2% vs. 0.15%).

Fund Composition

Industry Exposure

QQQ vs. VLUE - Industry Exposure

QQQ VLUE
Technology 45.46% 26.89%
Industrials 2.61% 9.14%
Energy 0.0% 2.42%
Communication Services 19.55% 10.39%
Utilities 0.89% 2.68%
Healthcare 7.04% 14.31%
Consumer Defensive 4.68% 7.22%
Real Estate 0.0% 3.19%
Financial Services 2.51% 10.96%
Consumer Cyclical 17.27% 10.66%
Basic Materials 0.0% 2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

QQQ is 18.57% more exposed to the Technology sector than VLUE (45.46% vs 26.89%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 9.16% higher and 6.61% higher respectively (19.55% vs. 10.39% and 17.27% vs. 10.66%). In total, Real Estate, Energy, and Utilities also make up 7.40% less of the fund’s holdings compared to VLUE (0.89% vs. 8.29%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

Performance

Annual Returns

QQQ vs. VLUE - Annual Returns

Year QQQ VLUE
2020 48.6% -0.32%
2019 39.12% 27.47%
2018 -0.14% -11.18%
2017 32.7% 21.97%
2016 7.01% 15.68%
2015 9.54% -3.54%
2014 19.12% 12.29%
2013 36.6% 0.0%
2012 18.09% 0.0%
2011 3.44% 0.0%
2010 19.89% 0.0%

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 VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

QQQ vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $38,251 21.27%
VLUE $10,000 $17,247 8.91%

A $10,000 investment in QQQ would have resulted in a final balance of $38,251. This is a profit of $28,251 over 7 years and amounts to a compound annual growth rate (CAGR) of 21.27%.

With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.

QQQ’s CAGR is 12.36 percentage points higher than that of VLUE and as a result, would have yielded $21,004 more on a $10,000 investment. Thus, QQQ outperformed VLUE by 12.36% annually.


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