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VOO vs. QQQ: What’s The Difference?

The Vanguard S&P 500 ETF (VOO) and the Invesco QQQ Trust (QQQ) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and QQQ is a Invesco Large Growth fund. So, what’s the difference between VOO and QQQ? And which fund is better?

The expense ratio of VOO is 0.17 percentage points lower than QQQ’s (0.03% vs. 0.2%). VOO also has a lower exposure to the technology sector and a lower standard deviation. Overall, VOO has provided lower returns than QQQ over the past ten years.

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

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Summary

VOOQQQ
NameVanguard S&P 500 ETFInvesco QQQ Trust
CategoryLarge BlendLarge Growth
IssuerVanguardInvesco
AUM753.41B174.51B
Avg. Return14.45%21.27%
Div. Yield1.34%0.49%
Expense Ratio0.03%0.2%

The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.

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%.

VOO’s dividend yield is 0.85% higher than that of QQQ (1.34% vs. 0.49%). Also, VOO yielded on average 6.82% less per year over the past decade (14.45% vs. 21.27%). The expense ratio of VOO is 0.17 percentage points lower than QQQ’s (0.03% vs. 0.2%).

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Fund Composition

Industry Exposure

VOO vs. QQQ - Industry Exposure

VOOQQQ
Technology24.24%45.46%
Industrials8.86%2.61%
Energy2.84%0.0%
Communication Services11.14%19.55%
Utilities2.43%0.89%
Healthcare13.1%7.04%
Consumer Defensive6.32%4.68%
Real Estate2.58%0.0%
Financial Services14.2%2.51%
Consumer Cyclical12.01%17.27%
Basic Materials2.27%0.0%

The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.

VOO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.01%, and 13.1%.

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%.

VOO is 21.22% less exposed to the Technology sector than QQQ (24.24% vs 45.46%). VOO’s exposure to Financial Services and Healthcare stocks is 11.69% higher and 6.06% higher respectively (14.2% vs. 2.51% and 13.1% vs. 7.04%). In total, Utilities, Real Estate, and Energy also make up 6.96% more of the fund’s holdings compared to QQQ (7.85% vs. 0.89%).

Holdings

VOO - Holdings

VOO HoldingsWeight
Apple Inc5.92%
Microsoft Corp5.62%
Amazon.com Inc4.06%
Facebook Inc Class A2.29%
Alphabet Inc Class A2.02%
Alphabet Inc Class C1.97%
Tesla Inc1.44%
Berkshire Hathaway Inc Class B1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.3%

VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.

QQQ - Holdings

QQQ HoldingsWeight
Apple Inc11.0%
Microsoft Corp9.82%
Amazon.com Inc8.35%
Facebook Inc Class A4.01%
Facebook Inc A4.01%
Alphabet Inc Class C3.9%
Tesla Inc3.9%
NVIDIA Corp3.65%
Alphabet Inc Class A3.53%
Alphabet Inc A3.53%

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%.

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Performance

Annual Returns

VOO vs. QQQ - Annual Returns

YearVOOQQQ
202018.35%48.6%
201931.46%39.12%
2018-4.42%-0.14%
201721.78%32.7%
201611.93%7.01%
20151.35%9.54%
201413.63%19.12%
201332.33%36.6%
201215.98%18.09%
20112.09%3.44%
20100.0%19.89%

VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% respectively.

The year 2020 was the strongest year for QQQ, returning 48.6% on an annual basis. The poorest year for QQQ in the last ten years was 2018, with a yield of -0.14%. Most years the Invesco QQQ Trust has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 18.09%, 19.12%, and 19.89% respectively.

Portfolio Growth

VOO vs. QQQ - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VOO$10,000$36,57514.45%
QQQ$10,000$63,82721.27%

A $10,000 investment in VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.

With a $10,000 investment in QQQ, the end total would have been $63,827. This equates to a $53,827 profit over 10 years and a compound annual growth rate (CAGR) of 21.27%.

VOO’s CAGR is 6.82 percentage points lower than that of QQQ and as a result, would have yielded $27,252 less on a $10,000 investment. Thus, VOO performed worse than QQQ by 6.82% annually.


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