You are currently viewing QQQ vs VOO: Which ETF Is Best Long Term?

QQQ vs VOO: Which ETF Is Best Long Term?

  • Reading time:13 mins read

We compare QQQ vs VOO:

Invesco QQQ Trust (QQQ) vs Vanguard S&P 500 ETF (VOO)

When it comes to investing, there is no shortage of fund options.

Choosing between two Exchange Traded Funds (ETFs) can be difficult, but I will make it easy to decide between QQQ and VOO.

QQQ vs VOO Comparison

 

QQQ vs VOO

The primary difference between QQQ and VOO is the company that offers the fund.  VOO is offered by Vanguard, while Invesco offers QQQ.

Another significant difference is the number of stocks in each, with VOO having 508 different companies compared to 100 with QQQ.

VOO has a lower expense ratio of 0.03% compared to 0.20% with QQQ.

QQQ is more than 6 times as expensive as VOO.

VOO

  • Tracks the S&P 500 Index
  • Expense Ratio: 0.03%
  • No Minimum Investment
  • Holds 508 Stocks
  • Vanguard Fund
  • VOO Institutional Fund Equivalent (VIIX)

QQQ

  • Tracks the Nasdaq-100 Index
  • Expense Ratio: 0.2%
  • No Minimum Investment
  • Holds 100 Stocks
  • Invesco Fund
  • Has Outperformed VOO Over 10 years
  • Higher Volatility Than VOO

 

QQQ vs VOO Performance

Invesco’s QQQ and VOO have performed differently over the last 5 years, with QQQ beating VOO by 10% annually.

Over 10 years, QQQ has beat VOO by 6% per year.

Here is how their performance compares:

QQQ vs VOO Performance

Here is another comparison with total returns:

QQQ vs VOO Performance Chart

As you can see, they have performed differently over the last 10 years, with QQQ beating VOO over the long term.

You can expect higher volatility with QQQ in exchange for that higher return.

 

QQQ vs VOO Holdings

QQQ is 63% technology, while VOO is 34%.  VOO is a broad-based fund diversified in several sectors of the market. Invesco’s QQQ is heavily weighted into the tech sector.

Here they are side by side:

QQQ vs VOO Holdings

QQQ vs VOO Top 10 Holdings

The top 10 holdings for QQQ make up 55% of its portfolio, while VOO’s top 10 holdings make up 30%.

This means the performance of a few stocks like Apple, Microsoft, and Amazon will significantly impact the overall performance of QQQ.

 

QQQ and VOO Holdings Overlap

There is an overlap between QQQ and VOO that includes 78 stocks.

Roughly 15% of VOO’s holdings are included in QQQ, and 76% of QQQ’s holdings are in VOO.

Here are QQQ and VOO holdings overlap:

QQQ vs VOO Holdings Overlap

There is overlap by weight of about 41%:

Overlap By Weight

This gives VOO more diversification compared to QQQ.

 

VOO and QQQ Differences

The main difference between VOO and QQQ is the company that offers the ETF.  Vanguard offers VOO, while Invesco offers QQQ.

Another significant difference is their number of holdings.  VOO holds five times as many stocks with 508 holdings compared to 100 holdings with QQQ.

This makes QQQ smaller than most other ETFs.

QQQ vs VOO Comparison Chart

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

Differences between VOO and QQQ:

  • Different Number Of Holdings (508 vs 100)
  • Level Of Diversification (QQQ is Tech Weighted)
  • Brokerage (VOO is Vanguard, QQQ is Invesco)
  • Expense Ratio (0.03% vs 0.20%)
  • Performance (QQQ Offers Higher Returns)

 

VOO Profile

  • Fund Inception: 2010
  • Expense Ratio: 0.03%
  • Number Of Stocks: 508
  • Top 10 Holdings: 30%
  • Admiral Fund (VFIAX)

Vanguard S&P 500 ETF (VOO) is a very popular ETF that tracks the S&P 500 index.

VOO has over $829.0 billion in fund total net assets. 

The fund invests in technology, healthcare, financials, industrials, and other industries and has a very low expense ratio.

Vanguard’s VOO ETF has been labeled one of the best investments for beginners because of its low cost, built-in diversification, and excellent performance.

 

VOO Performance

Vanguard’s VOO aims to have the same performance returns as the S&P 500 index.

Therefore, VOO and the S&P 500 should always overlap.

VOO Performance

VOO (Blue)                S&P 500 (Yellow)

As you can see, VOO and the S&P 500 overlap in performance.

This should be an expectation in the future.

 

VOO Holdings

Here are the top 10 holdings for VOO:

VOO Top 10 Holdings

Vanguard’s VOO is largely made up of Microsoft, Apple, Alphabet, Amazon, and Tesla and provides exposure to over 500 other stocks.

 

No Minimum Investment

VOO 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.  (Get $50 When You Use This Link)

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 or VOO due to their high prices per share (~$360 and ~$425).

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

  1. Vanguard to invest in VOO
  2. M1 Finance to invest in either VOO or QQQ.  (Use this link for $50 when you open a new account)

Both of these options are free.

This is important because fees can lower our returns.

I like M1 Finance as the best option because it gives you the flexibility to purchase VOO, QQQ, and thousands of other stocks.

 

QQQ Profile

  • Fund Inception: 1999
  • Expense Ratio: 0.2%
  • Number Of Stocks: 100
  • Top 10 Holdings: 55.70%

Invesco QQQ Trust (QQQ) provides investors with exposure to a similar portfolio to the Nasdaq 100 index.

The ETF is comprised of mostly technology companies that are high in growth.

QQQ was created in 1999 and currently has an expense ratio of 0.2%, which isn’t high but compared to VOO, it is 6 times the cost.

To put some perspective on that, here is what a 0.17% fee (difference between VOO 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 each year over the 30 years.

You will have $139,000 less in your account due to the fee because of the extra 0.17% expense ratio.

This 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 20.34% per year.

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

QQQ Performance

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

Since its inception, QQQ has shown excellent 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 $135 billion in total assets.

 

QQQ Holdings

QQQ is the fourth-most popular ETF globally, with 102 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 Top Holdings

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

 

Which Is Better QQQ or VOO?

QQQ and VOO are different investments.  However, VOO offers more diversification since it holds about 5 times as many stocks.

This diversification has resulted in less volatility and lower returns over the last 10 years.

However, that doesn’t mean the next 10 years will look the same.

Its higher expense ratio offsets some of the higher returns provided by QQQ.

VOO offers stable returns with more diversification and at a lower cost.

QQQ offers the potential for higher returns with more risk/volatility and at a higher cost.

If having a larger basket of stocks helps you sleep at night, then VOO would be a better option.

If you seek the highest possible returns and can handle the increased volatility, then QQQ offers better returns at a higher risk.

Lastly, it’s important to consider costs and fees because they can cost you in the long run, as we saw from our example above.

That’s why it’s so important to purchase and sell your shares commission-free.

Again a great way to do this is with M1 Finance(Get $50 When You Use This Link)

You can purchase fractional shares for free, and they give you the ability to buy VOO, QQQ, and thousands of other stocks/ETFs.

Related Posts:

 

Is VOO or QQQ Better for Financial Independence?

Both VOO and QQQ can get you to Financial Independence Retire Early (FIRE).

They both have performed excellent over the last 10 years and have low expense ratios.

Being part of the FIRE community, we aim for the lowest fees possible, and we are big fans of Vanguard.

For those reasons, I prefer VOO.

If you are interested in a Vanguard ETF with similar returns to QQQ but at half the price, take a look at VOOG.

FIRE Calculator

Calculate Your FI Number With My Free FIRE Calculator

 

My Winner: VOO

My winner is VOO based on the lower expense ratio, and I love Vanguard.

VOO offers more diversification, lower fees, and is a Vanguard fund.

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

I prefer VOO because I’m a big fan of Vanguard and its low fees.

However, I suggest looking into other funds that give you more diversification, like VTSAX.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Fat FIRE: Early Retirement In Style!