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VOOG vs QQQ: Better Growth ETF

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We Compare VOOG vs QQQ: Vanguard S&P 500 Growth ETF (VOOG) vs Invesco QQQ Trust (QQQ).

These are two popular growth Exchange Traded Funds (ETFs).  This article will help you decide between VOOG and QQQ.VOOG vs QQQ Comparison

 

VOOG vs QQQ

The main difference between VOOG and QQQ is the company that offers the exchange-traded fund (ETF).  VOOG is offered by Vanguard.  QQQ is offered by Invesco.

Another significant difference is the expense ratio.  VOOG has an expense ratio of 0.1%.  QQQ has an expense ratio of 0.2%.  That is double the cost!

VOOG:

  • Tracks the Standard & Poor’s 500 Growth Index
  • Has an expense ratio of 0.1%
  • Offered by Vanguard
  • Holds 242 stocks
  • Similar to VUG

QQQ:

  • Tracks the performance of the Nasdaq-100 Index
  • Has an expense ratio of 0.2%
  • Offered by Invesco
  • Holds 100 stocks

 

VOOG vs QQQ Performance

VOOG and QQQ have performed similarly over the last 10 years with QQQ beating VOOG by ~ 3% annually.  However, over the last year, VOOG is beating QQQ 34% to 30%.

Performance Comparison:

VOOG vs QQQ Performance

VOOG (Yellow)      QQQ (Blue)

As you can see from the chart, VOOG and QQQ have similar returns.

Similarities between VOOG and QQQ:

  • Exchange-Traded Funds (ETFs)
  • Similar Performance Over The Long-Term
  • Focused On Growth Companies
  • Amount Of Holdings

 

VOOG and QQQ Differences

VOOG vs QQQ primarily differ in that VOOG is a Vanguard fund while QQQ is offered by Invesco.  QQQ is also twice as expensive with an expense ratio of 0.2% compared to 0.1% for VOOG.

Differences between VOOG and QQQ:

  • Different Number Of Holdings (~242 vs ~100)
  • Company That Offers The Fund (Vanguard vs Invesco)
  • Expense Ratio (0.1% vs 0.2%)

 

VOOG Profile

  • Fund Inception: 2010
  • Expense Ratio: 0.1%
  • Number Of Stocks: 242
  • Top 10 Holdings: 57.1%
  • Similar to VUG

Vanguard S&P 500 Growth ETF (VOOG) is an ETF focused on growth companies.  The price-to-earnings (P/E) ratio for VOOG is 34.2x which is high.

That is expected with a growth index.  The fund has $169 billion in total net assets.

VOOG was created in 2010 and currently has an expense ratio of 0.1%.  This is half the cost of QQQ which has an expense ratio of 0.2%.

Here is what a 0.1% fee (difference between VOOG and QQQ) will cost over 30 years.

Assuming you start with an initial investment of $100,000 and contribute $10,000 each year, over 30 years.  You will have roughly ~$82,000 less in your account.

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

 

VOOG Performance

Vanguard’s VOOG has outperformed the S&P 500 over the last 10 years:

VOOG Performance

VOOG (Blue)      S&P 500 (Yellow)

 

VOOG Top 10 Holdings

VOOG Top 10 Holdings

Vanguard VOOG’s top 10 holdings include Microsoft, Apple, Google, Amazon, and Tesla.  The ETF also provides exposure to over 200 stocks

However, with the top 10 holdings making up over 50% of the portfolio, it isn’t very diversified compared to other ETFs such as Vanguard Total Stock Market Index Fund ETF (VTI).

 

How To Invest In VOOG and QQQ

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

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

Both of these options are free.  This is important because as we saw in our earlier example, fees can lower our returns.

You can still invest in VOOG and QQQ using other platforms like Fidelity or Interactive Brokers but there may be a charge.

I like M1 Finance as the best option because it gives you the flexibility to purchase VOOG, QQQ, and thousands of other stocks.  M1 Finance also lets you purchase fractional shares.  This is great for QQQ and VOOG due to their high prices per share (~$360/Share and $401/share respectively).

 

QQQ Profile

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

 

The Invesco QQQ Trust (QQQ) was created in 1999 and has an expense ratio of 0.2%.  It 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.  The price to earnings (P/E) ratio for QQQ is 32x and the fund has 174.51B in net assets.

 

QQQ Performance

QQQ Performance Chart

QQQ (Blue)      VOO (Green)

Over the last 10 years, QQQ has outperformed the S&P 500 with an average return of 21.25% per year.  QQQ has performed well over the last 10 years but there is no guarantee the next 10 years look the same.

 

QQQ Top 10 Holdings

QQQ Top 10 Holdings

Invesco QQQ’s top 10 holdings include Apple, Microsoft, Amazon, Tesla, and NVIDIA.

 

Which is Better VOOG or QQQ?

VOOG and QQQ are very similar investments.  VOOG offers a similar asset allocation at a much lower cost of only 0.1%.

As we saw earlier, QQQ beat VOOG by 3% annually.  If those returns continue for the next 10 years it would make the higher cost of QQQ worth it.

However, past performance does not predict future returns.  Therefore, VOOG may beat QQQ over the next 10 years with a lower expense ratio.  That would be a win-win for VOOG investors!  

For those reasons, I would say VOOG is the better option.  It gives you similar returns at a guaranteed lower cost.  There are also more ways to purchase VOOG for free like at Vanguard and M1 Finance.

 

Is VOOG or QQQ Better for Financial Independence?

Both VOOG and QQQ can help you reach Financial Independence Retire Early (FIRE).  They both have similar returns on investment.  They also have performed great over the last 10 years.

I would prefer VOOG because I’m a big fan of Vanguard and its low fees.  I would also suggest looking into other funds that give you more diversification like VTSAX.

Similar Comparisons:

 

My Winner: VOOG

My winner is VOOG based on its lower expense ratio of 0.1%.  I also lean towards Vanguard funds because I know they will keep their fees low.

Regardless of whether you choose VOOG or QQQ, the important part is investing regularly in low-cost funds over the long term.  That is the formula for wealth!

If you like ETF comparisons like these check out more in our related posts below.

 


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.
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