QQQ vs SCHG: Which Is The Best Growth ETF?

We Compare QQQ vs SCHG:

We are going to explore the difference between Invesco QQQ Trust (QQQ) vs Schwab U.S. Large-Cap Growth ETF (SCHG)

Choosing between two funds can be difficult, but I will make it easy to decide between QQQ vs SCHG.

 

QQQ vs SCHG

The primary difference between QQQ and SCHG is the company that offers the exchange-traded fund (ETF).  SCHG is offered by Charles Schwab, while Invesco offers QQQ.

They also track different indexes.  For example, SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, while QQQ tracks the NASDAQ 100 Index.

Another significant difference is the number of stocks in each, with QQQ having 103 different companies in the index compared to 229 with SCHG.

Invesco offers QQQ.

Charles Schwab offers SCHG.

QQQ and SCHG also have different expense ratios.

SCHG has an expense ratio of 0.04%, while QQQ’s expense ratio is 0.20%.

QQQ

• Tracks the performance of the Nasdaq-100 Index
• It has an expense ratio of 0.20%
• No minimum initial investment
• Holds 103 stocks

SCHG

• Fund Inception: 2009
• Offered By Charles Schwab
• Tracks Dow Jones U.S. Large-Cap Growth Total Stock Market Index
• Expense Ratio: 0.04%
• Number Of Stocks: 229

 

QQQ vs SCHG Performance

QQQ and SCHG have had similar performance returns over the last 10 years, with QQQ beating SCHG by 3.23% annually.

Here is how their performance compares:

Here is another comparison of short-term performance:

Again, as you can see, they have performed similarly over the short and long term.

This performance is because they both aim to have the same market exposure.

 

QQQ vs SCHG Holdings

There is a difference in the number of holdings for QQQ and SCHG. QQQ includes 103 stocks in the ETF, while SCHG holds 229 stocks. A difference of 126 holdings.

SCHG holds more companies compared to QQQ.

Both funds have the same sector diversification.  SCHG is 50% technology which is the same as QQQ.

However, SCHG has slightly more diversification due to its 229 holdings than only 103 with QQQ.

QQQ and SCHG’s top 10 holdings comprise around 50% of their assets.

Here are QQQ and SCHG holdings side-by-side:

The only difference between SCHG and QQQ’s top 10 holdings is SCHG includes UnitedHealth Group and Visa, while QQQ has Broadcom and Pepsi.

 

QQQ vs SCHG Overlap

There is an overlap between QQQ and SCHG that includes 53 stocks.  53% of the holdings in QQQ are also in SCHG.  However, only 22% of SCHG’s holdings are in QQQ.

Here are SCHG and QQQ holdings overlap:

This overlap means SCHG includes a large portion of holdings that are in QQQ and includes many more holdings.

SCHG has more diversification compared to QQQ.

 

QQQ and SCHG Differences

The main difference between QQQ and SCHG is the company that offers the fund.  SCHG is offered by Schwab, while Invesco offers QQQ.

They also differ in the number of holdings.  QQQ holds 103 companies, while SCHG holds 229, larger than QQQ.

Lastly, QQQ provides more liquidity with $167 billion in net assets compared to $15 billion with SCHG.

By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.

Differences between QQQ and SCHG:

• Brokerage (QQQ is Invesco, SCHG is Schwab)
• Different Number Of Holdings (103 vs 229)
• Liquidity
• Tracking Index

 

QQQ Profile

• Fund Inception: 1999
• Expense Ratio: 0.20%
• Number Of Stocks: 103
• Top 10 Holdings: 55.70%

The Invesco QQQ Trust (QQQ) exposes investors to a similar portfolio to the Nasdaq 100 index.  The ETF is comprised mostly of technology companies that are high in growth.

QQQ was created in 1999 and currently has an expense ratio of 0.20%, which isn’t high, but compared to SCHG, it is 5 times more expensive to own QQQ.

To put some perspective on that, here is what a 0.16% fee (difference between SCHG and QQQ) will cost you as an investor over 30 years.

Assuming you start with an initial investment of $100,000 and contribute $10,000 yearly over 30 years.

You will have roughly $139,000 less in your account due to the fee because of the extra 0.16% expense ratio.

That does not include costs to buy and sell your shares.

 

QQQ Performance

Over the last 10 years, QQQ has outperformed the S&P 500 with an average return of 17.35% annually.

Here is the growth of $10,000 over 10 years with QQQ:

QQQ has performed well over the last 10 years, but again there is no guarantee the next 10 years will look the same.

Since its inception, QQQ has shown outstanding performance, consistently outperforming the S&P 500 benchmark index.

The fund ranks in the top 1% of large-cap growth funds.

Due to QQQ’s outstanding performance, the fund has become one of the most popular funds among long-term investors.

It now has $167 billion in total assets.

 

QQQ Holdings

QQQ is the fourth-most popular ETF in the world, with 103 securities holdings, most of which are top technological companies.

These companies cut across various industries, including:

• Cloud Computing
• Payment Services
• Electric Vehicles
• Data Collection

QQQ excludes financial companies. Invesco’s QQQ is a large capitalization index focused on technology companies.

Here are the top holdings for QQQ:

QQQ is primarily made up of Apple, Microsoft, Amazon, and Tesla.

 

No Minimum Investment

SCHG and QQQ are exchange-traded funds (ETFs), so there is no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.  (Use this link for a $100 bonus)

Typically, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  This is great for shares of QQQ due to its high prices per share.

There are two easy ways to invest in QQQ or SCHG commission-free.

1. Invesco to invest in QQQ or Charles Schwab for SCHG
2. M1 Finance to invest in either QQQ or SCHG.  (Use this link for $100 when you open a new account)

Both of these options are free. This is important because fees can lower our returns.

M1 Finance is the best option because it lets you purchase QQQ, SCHG, and thousands of other stocks.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital’s free tools allow you to quickly find which of your investments has high fees so you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

SCHG Description

• Fund Inception: 2009
• Offered By Charles Schwab
• Tracks Dow Jones U.S. Large-Cap Growth Total Stock Market Index
• Expense Ratio: 0.04%
• Number Of Stocks: 229

The Schwab U.S. Large-Cap Growth ETF (SCHG) was launched in 2009 and tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

SCHG passively manages to expose investors to the U.S. large-cap growth equity market. Equities include large, mid, and small-cap companies.

It has over $15 billion, making it one of the largest ETFs to track the growth U.S. equity market.

Large, mid, and small-cap companies provide more diversification.  More diversification translates into less risk for investors.

 

SCHG Performance

SCHG closely monitors and seeks to replicate the performance of its underlying index, the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

This has resulted in excellent performance returns over the last 10 years:

In addition, the ETF gives investors access to over 200 of the most prominent growth companies in the United States with diversification into all market capitalizations.

As you can see, SCHG has performed well since its inception in 2009.

The ETF has a beta of 1.00 and a standard deviation of 18.34% for the trailing three-year period.  This makes SCHG a medium-risk choice in its class.

The fund has roughly 229 holdings.

Schwab U.S. Large-Cap Growth ETF may be a good option for investors looking for growth in the U.S. market.

The fund also has a low expense ratio and significant momentum.

 

SCHG Costs

Cost is a vital factor to consider when choosing an ETF.  To analyze the cost of an ETF, you should look at the expense ratio.

Cheaper funds tend to yield higher profits since they spend less on management.

SCHG is one of the cheapest exchange-traded funds, with an expense ratio of 0.04%.

In other words, for a $10,000 investment, the ETF charges you $4 for annual operating expenses.

 

SCHG Holdings

The top 10 holdings for SCHG make up 57% of its total assets.

Schwab’s SCHG comprises Apple, Microsoft, Amazon, Alphabet, and Tesla and provides exposure to over 200 stocks.

If you are looking for a Schwab fund similar to SCHG, look at the Schwab U.S. Dividend Equity ETF (SCHD).

 

Which Is Better QQQ or SCHG?

QQQ and SCHG are similar investments.  They have performed similarly over the last 10 years but have different expense ratios.

QQQ’s expense ratio is 0.20%

SCHG’s expense ratio is 0.04%.

SCHG offers more diversification and less volatility since it holds more stocks.

Which is better will likely depend on which brokerage you prefer to use.

Invesco customers will likely prefer QQQ.

Charles Schwab customers will probably select SCHG.

That said, slight differences could make SCHG better for some investors.

SCHG has more diversification and less volatility. It also offers a significantly lower expense ratio.

Considering costs and fees is important because they can cost you in the long run.

That’s why buying and selling your shares commission-free is essential.

Again a great way to do this is with M1 Finance.

You can purchase fractional shares for free, allowing you to buy QQQ, SCHG, and thousands of other stocks/ETFs.

 

Is QQQ or SCHG Better For Financial Independence?

QQQ and SCHG have performed well enough to get you to Financial Independence Retire Early (FIRE).  They have performed excellently over the last 10 years and have low expense ratios.

Being part of the FIRE community, we aim for the lowest fees possible and the most diversification.

Calculate Your FI Number With My Free FIRE Calculator

For those reasons, I prefer SCHG over QQQ.

Related Posts:

• VUG vs VOOG
• MGK vs VUG
• VGT vs QQQ
• QQQ vs VUG
• VUG vs VGT
• VUG vs SCHG
• QQQ vs SCHD

 

My Winner: SCHG

My winner is SCHG, based on the higher diversification and lower expense ratio.

Low fees are a guaranteed way to keep more money in your portfolio!

For even more diversification, I suggest an ETF like Vanguard’s Total Market Admiral fund VTSAX.