QQQ vs. SPY — ETF comparison tool (2024)

FAQs

How is QQQ compared to SPY? ›

QQQ - Volatility Comparison. The current volatility for SPDR S&P 500 ETF (SPY) is 2.99%, while Invesco QQQ (QQQ) has a volatility of 4.04%. This indicates that SPY experiences smaller price fluctuations and is considered to be less risky than QQQ based on this measure.

Invesco QQQ — the ETF that tracks the Nasdaq-100 index — has beaten the S&P 500 nine out of the last 10 years. Source: Morningstar Inc. Data begins 10 years prior to the ending date. Fund performance shown at NAV.

Over the past two decades, QQQ's volatility was 23% higher than Vanguard S&P 500 ETF VOO while its drawdowns were steeper, too. Vanguard S&P 500 ETF VOO is better diversified than QQQ, which leads to a more benign and predictable experience for investors.

SPY is unquestionably more diverse

Healthcare, Financials, Consumer Discretionary, and Utilities all make up the top five. QQQ may tout itself as “more than just a tech fund,” but the numbers say “barely.” IT and Communications make up 65.44%, while Healthcare comes in at just 7.62%.

Performance data quoted represents past performance, which is not a guarantee of future results. An investor cannot invest directly in an index. Index returns do not represent Fund returns. Source: Bloomberg L.P., QQQ NAV 10-year performance reflected 18.58% growth versus 12.93% by the S&P 500, as of March 31, 2024.

On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps. Overall, QQQ can be a good long-term investment as part of a larger portfolio.

The problems with Invesco QQQ Trust

The number one biggest problem with Invesco QQQ Trust is that a small number of stocks make up a large percentage of the fund. That's not the fund's fault, it is simply tracking the index. But you can't ignore this lack of diversification.

What ETF is better than QQQ? ›

Pure Tech, Pure Growth

When you pit “QQQ vs VGT,” VGT's tech purity stands out. It zeroes in on the tech sector, tracking the performance of the MSCI US Investable Market Information Technology 25/50 Index.

Bloomberg recently reported that only one equity mutual fund, the Baron Partners Fund, has outperformed QQQ over the past 5, 10, and 15 years, mainly due to its outsized exposure to Tesla.

There are no financial companies within QQQ. The table demonstrates that the difference between SPY and QQQ is that the S&P 500 Index and SPY ETF provide much better options for diversification across economic sectors.

The Vanguard 500 Index Fund Admiral Class (VFIAX) and the SPDR S&P 500 ETF (SPY) are similar investment products. Both track the S&P 500, a U.S. stock index comprising 500 companies with the largest market capitalizations.

For most investors, the differences between the four ETFs are minor. They all track the same index, have similar holdings, and largely similar returns. The primary difference between SPY, VOO, IVV, and SPLG is their cost. SPLG has the lowest cost at 0.02%, followed by VOO and IVV at 0.03%, and SPY at 0.09%.

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.

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.