The Invesco QQQ Trust (QQQ) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between QQQ and VTIP? And which fund is better?
The expense ratio of QQQ is 0.15 percentage points higher than VTIP’s (0.2% vs. 0.05%). QQQ also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, QQQ has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare QQQ vs. VTIP. We’ll look at holdings and performance, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss QQQ’s and VTIP’s industry exposure, annual returns, and risk metrics and examine how these affect their overall returns.
Summary
| QQQ | VTIP | |
| Name | Invesco QQQ Trust | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Growth | Inflation-Protected Bond |
| Issuer | Invesco | Vanguard |
| AUM | 174.51B | 50.67B |
| Avg. Return | 21.27% | 1.79% |
| Div. Yield | 0.49% | 1.35% |
| Expense Ratio | 0.2% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
QQQ’s dividend yield is 0.86% lower than that of VTIP (0.49% vs. 1.35%). Also, QQQ yielded on average 19.48% more per year over the past decade (21.27% vs. 1.79%). The expense ratio of QQQ is 0.15 percentage points higher than VTIP’s (0.2% vs. 0.05%).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Performance
Annual Returns
| Year | QQQ | VTIP |
| 2020 | 48.6% | 4.97% |
| 2019 | 39.12% | 4.83% |
| 2018 | -0.14% | 0.54% |
| 2017 | 32.7% | 0.82% |
| 2016 | 7.01% | 2.71% |
| 2015 | 9.54% | -0.15% |
| 2014 | 19.12% | -1.17% |
| 2013 | 36.6% | -1.55% |
| 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $38,251 | 21.27% |
| VTIP | $10,000 | $11,305 | 1.79% |
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
QQQ’s CAGR is 19.48 percentage points higher than that of VTIP and as a result, would have yielded $26,946 more on a $10,000 investment. Thus, QQQ outperformed VTIP by 19.48% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
