QQQ vs. VOO — ETF comparison tool (2024)

FAQs

QQQ vs. VOO — ETF comparison tool? ›

Average Return

VGT and QQQ are both exchange-traded funds (ETFs), meaning they are traded on stock exchanges and can be bought and sold throughout the day. VGT is a passively managed fund by Vanguard that tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index.

QQQ and VOO Holdings Overlap

If we compare the top 10 companies by weight in each of the indices, 7 of them will match. The correlation between stock prices of QQQ and VOO is 0.89. This is considered to be a high indicator.

QQQ options tend to have higher volatility due to the tech sector's rapid price movements, leading to higher premiums compared to SPY options. This volatility can be a double-edged sword, offering the potential for higher returns but also greater risk.

Average Return. In the past year, QQQ returned a total of 30.45%, which is higher than VOO's 26.56% return. Over the past 10 years, QQQ has had annualized average returns of 18.36% , compared to 12.58% for VOO. These numbers are adjusted for stock splits and include dividends.

For investors seeking an alternative to QQQ's mega-cap exposure, the Invesco S&P 500 Top 50 ETF (XLG) is an excellent option. XLG tracks the S&P 500 Top 50 Index, which, like QQQ, is heavily weighted towards top-tier tech and consumer stocks.

The QQQ ETF offers buy-and-hold investors low expenses and long-term growth potential with enough diversification to avoid the risks of betting on one company. On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps.

Many people pair VOO with the Vanguard Total Bond Market ETF (BND) in a broader portfolio. The fixed income ETF has $95 billion in assets and is the largest bond ETF trading in the U.S. BND has two-thirds of its assets in U.S. government bonds, with most of the remainder in investment-grade corporate bonds.

A history of outperformance. Invesco QQQ — the ETF that tracks the Nasdaq-100 index — has beaten the S&P 500 nine out of the last 10 years.

What are the three best ETFs? ›

Vanguard High Dividend Yield ETF (VYM)

The better Vanguard ETF for their needs is likely VYM, which delivers a higher 2.9% 30-day SEC yield by targeting the FTSE High Dividend Yield Index. It also charges the same expense ratio as VIG does, at 0.06%.

QQQ appears to be the single best long-term investment option for investors seeking total returns due to its ability to expose holders to top U.S. companies on an ongoing basis. The Nasdaq 100 has consistently outperformed the S&P 500 in terms of total returns, making it a favorable choice for long-term investors.

The numbers clearly show that the Nasdaq 100 has significantly outperformed S&P 500 index in terms of return over long term despite witnessing higher correction. However, a tilt towards technology stocks makes Nasdaq 100 look more like a thematic index.

QQQ Dividend Information

QQQ has a dividend yield of 0.58% and paid $2.64 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 18, 2024.

USAA Nasdaq-100 Index Fund's holdings and breakdown are virtually identical to the QQQ, which is to be expected. They both just track the index.

VYM provides investors with a consistent stream of dividend income from high-quality companies, while QQQ offers exposure to innovative technology and growth-oriented stocks.

VGT - Performance Comparison. In the year-to-date period, QQQ achieves a 11.60% return, which is significantly lower than VGT's 13.49% return. Over the past 10 years, QQQ has underperformed VGT with an annualized return of 18.47%, while VGT has yielded a comparatively higher 20.66% annualized return.

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Meta Platforms (NASDAQ: META) make up a staggering 45% of the Vanguard Communication Services ETF. But it wasn't always this way. ETFs rebalance their weightings to adjust for changes in market capitalization.