The Invesco QQQ Trust (QQQ) and the Vanguard Value Index Fund ETF Shares (VTV) are both among the Top 100 ETFs. QQQ is a Invesco Large Growth fund and VTV is a Vanguard Large Value fund. So, what’s the difference between QQQ and VTV? And which fund is better?
The expense ratio of QQQ is 0.16 percentage points higher than VTV’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 VTV over the past ten years.
In this article, we’ll compare QQQ vs. VTV. We’ll look at annual returns and portfolio growth, as well as at their risk metrics and performance. Moreover, I’ll also discuss QQQ’s and VTV’s fund composition, industry exposure, and holdings and examine how these affect their overall returns.
|Name||Invesco QQQ Trust||Vanguard Value Index Fund ETF Shares|
|Category||Large Growth||Large Value|
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 Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
QQQ’s dividend yield is 1.66% lower than that of VTV (0.49% vs. 2.15%). Also, QQQ yielded on average 9.20% more per year over the past decade (21.27% vs. 12.07%). The expense ratio of QQQ is 0.16 percentage points higher than VTV’s (0.2% vs. 0.04%).
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 Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
QQQ is 37.60% more exposed to the Technology sector than VTV (45.46% vs 7.86%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 14.06% higher and 13.48% higher respectively (19.55% vs. 5.49% and 17.27% vs. 3.79%). In total, Real Estate, Energy, and Utilities also make up 13.08% less of the fund’s holdings compared to VTV (0.89% vs. 13.97%).
|Facebook Inc Class A||4.01%|
|Facebook Inc A||4.01%|
|Alphabet Inc Class C||3.9%|
|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%.
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
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 VTV, returning 33.03% on an annual basis. The poorest year for VTV in the last ten years was 2018, with a yield of -5.39%. Most years the Vanguard Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.19%, 14.45%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTV, the end total would have been $33,163. This equates to a $23,163 profit over 11 years and a compound annual growth rate (CAGR) of 12.07%.
QQQ’s CAGR is 9.20 percentage points higher than that of VTV and as a result, would have yielded $43,359 more on a $10,000 investment. Thus, QQQ outperformed VTV by 9.20% annually.
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