QQQ vs. VO: What’s The Difference?

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

The expense ratio of QQQ is 0.16 percentage points higher than VO’s (0.2% vs. 0.04%). QQQ also has a higher exposure to the technology sector and a higher standard deviation. Overall, QQQ has provided higher returns than VO over the past ten years.

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

Summary

QQQ VO
Name Invesco QQQ Trust Vanguard Mid-Cap Index Fund ETF Shares
Category Large Growth Mid-Cap Blend
Issuer Invesco Vanguard
AUM 174.51B 154.08B
Avg. Return 21.27% 14.34%
Div. Yield 0.49% 1.23%
Expense Ratio 0.2% 0.04%

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 Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

QQQ’s dividend yield is 0.74% lower than that of VO (0.49% vs. 1.23%). Also, QQQ yielded on average 6.93% more per year over the past decade (21.27% vs. 14.34%). The expense ratio of QQQ is 0.16 percentage points higher than VO’s (0.2% vs. 0.04%).

Fund Composition

Industry Exposure

QQQ vs. VO - Industry Exposure

QQQ VO
Technology 45.46% 22.01%
Industrials 2.61% 11.92%
Energy 0.0% 3.82%
Communication Services 19.55% 5.61%
Utilities 0.89% 5.12%
Healthcare 7.04% 13.03%
Consumer Defensive 4.68% 3.25%
Real Estate 0.0% 8.67%
Financial Services 2.51% 11.08%
Consumer Cyclical 17.27% 12.12%
Basic Materials 0.0% 3.36%

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 Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

QQQ is 23.45% more exposed to the Technology sector than VO (45.46% vs 22.01%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 13.94% higher and 5.15% higher respectively (19.55% vs. 5.61% and 17.27% vs. 12.12%). In total, Real Estate, Energy, and Utilities also make up 16.72% less of the fund’s holdings compared to VO (0.89% vs. 17.61%).

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%.

VO - Holdings

VO Holdings Weight
IDEXX Laboratories Inc 0.78%
DocuSign Inc 0.75%
Marvell Technology Inc 0.68%
IQVIA Holdings Inc 0.68%
Chipotle Mexican Grill Inc 0.63%
Veeva Systems Inc Class A 0.62%
Digital Realty Trust Inc 0.62%
Centene Corp 0.62%
Aptiv PLC 0.62%
Carrier Global Corp Ordinary Shares 0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

Performance

Annual Returns

QQQ vs. VO - Annual Returns

Year QQQ VO
2020 48.6% 18.22%
2019 39.12% 31.04%
2018 -0.14% -9.21%
2017 32.7% 19.25%
2016 7.01% 11.23%
2015 9.54% -1.34%
2014 19.12% 13.76%
2013 36.6% 35.15%
2012 18.09% 15.98%
2011 3.44% -1.96%
2010 19.89% 25.57%

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 VO, returning 35.15% on an annual basis. The poorest year for VO in the last ten years was 2018, with a yield of -9.21%. Most years the Vanguard Mid-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2012, and 2020, when gains were 13.76%, 15.98%, and 18.22% respectively.

Portfolio Growth

QQQ vs. VO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
QQQ $10,000 $76,522 21.27%
VO $10,000 $40,404 14.34%

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 VO, the end total would have been $40,404. This equates to a $30,404 profit over 11 years and a compound annual growth rate (CAGR) of 14.34%.

QQQ’s CAGR is 6.93 percentage points higher than that of VO and as a result, would have yielded $36,118 more on a $10,000 investment. Thus, QQQ outperformed VO by 6.93% annually.


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