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VTI vs QQQ: Which Is The Better ETF?

  • Reading time:13 mins read

We compare VTI vs QQQ.

Vanguard Total Stock Market ETF (VTI) vs Invesco QQQ Trust (QQQ).

There is no shortage of options for investing in Exchange Traded Funds (ETFs).

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

VTI vs QQQ Graphic

 

VTI vs QQQ

The primary difference between VTI and QQQ is the exchange-traded fund (ETF) company.  Vanguard offers VTI, while Invesco offers QQQ.

Vanguard offers VTI

Invesco offers QQQ

Another significant difference is the number of stocks in each, with VTI having 3535 different companies in the index compared to 100 with QQQ.

VTI

  • Tracks the CRSP U.S Total Market Index
  • Expense Ratio: 0.03%
  • No Minimum Investment
  • Holds 3535 Stocks

QQQ

  • Tracks the Nasdaq-100 Index
  • Expense Ratio: 0.2%
  • No Minimum Investment
  • Holds 100 Stocks

 

VTI vs QQQ Performance

VTI and QQQ have performed differently over the last 5 years, with QQQ beating VTI by more than 8%.

Here is how their performance compares:

 

VTI vs QQQ Performance

As you can see, QQQ has significantly outperformed VTI over the years.  However, this doesn’t necessarily mean this trend will continue.

Similarities between QQQ and VTI:

  • Exchange-Traded Funds (ETFs)
  • Low Expense Ratios

 

QQQ vs VTI Holdings

There is a significant difference in the number of holdings for QQQ and VTI.  QQQ includes 100 stocks in the ETF, while VTI holds 3535 stocks.

VTI holds more companies compared to QQQ.

These funds also have different sector diversification.  For example, QQQ is 50% technology, while VTI is about 27%.

Therefore, VTI has more diversification due to its 3535 holdings than only 100 with QQQ.

Lastly, VTI and QQQ’s top 10 holdings make up a different percentage of their total assets.

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

QQQ vs VTI Holdings

 

QQQ and VTI share many top 10 holdings.  The difference is the concentration of total assets within their top 10.

VTI’s top 10 make up 24 % of its total assets.

QQQ’s top 10 make up 52 % of its total assets.

 

VTI and QQQ Differences

A primary difference between VTI and QQQ is their number of holdings.  VTI holds 3535 companies, while QQQ holds 100 companies.  This means VTI has 35 times as many stocks.

With only 100 holdings, QQQ is a smaller ETF than others in the industry.

VTI vs QQQ Comparison Chart

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

Differences between VTI and QQQ:

  • Different Number Of Holdings (~3535 vs ~100)
  • Expense Ratio (0.2% vs 0.03%)
  • Level Of Diversification (QQQ focuses only on high growth companies)

 

VTI Profile

  • Fund Inception: 2001
  • Expense Ratio: 0.03%
  • Number Of Stocks: 3535
  • Top 10 Holdings: 23.9%
  • Equivalent Admiral Fund (VTSAX)

Vanguard Total Stock Market ETF (VTI) represents close to 100% of the U.S. equity market.  It also tracks the CRSP U.S. Total Market Index.

Vanguard’s VTI has an expense ratio of 0.03%.

This implies that the fund has limited exposure to several international stocks.

Yet, this does not in any way affect the companies represented in the fund.  Moreover, these stocks have a significant international presence.

 

VTI Performance

Vanguard Total Stock Market ETF (VTI) is famous for so many reasons, of which consistent returns are a significant part.

VTI Performance Chart

Its risk level is similar to that of the S&P 500.

VTI vs S&P 500 Performance Chart

 

VTI Holdings

Vanguard’s VTI is primarily made up of Apple, Microsoft, Google, Amazon, and Tesla and provides exposure to over 3500 stocks.

Here are the top 10 holdings for VTI:

VTI Top Holdings

Major sectors in the index include:

  • Technology
  • Healthcare
  • Consumer Services
  • Financials
  • Industrials

The top 10 holdings make up 25% of its total net assets.

The fund has $1.3 trillion in total net assets.

The top 10 holdings of VTI make up 25% of the ETF, which makes it much more diversified compared to QQQ, with its top 10 holdings making up over 50%.

 

No Minimum Investment

VTI and QQQ are exchange-traded funds (ETFs) with no minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance.  (Get $50 When You Use This Link)

Usually, 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.  You no longer have to keep your money sitting idle until you have enough to purchase a full share.

This is especially beneficial for shares of QQQ or VTI due to their high prices per share (~$360/Share and $234/Share, respectively).

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 Retirement Fee Analyzer

Personal Capital’s free tools allow you to easily find which of your investments has high fees so that 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)

 

QQQ Profile

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

The 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%, making it a low-cost ETF to own.  However, it is not as low as VTI (0.03% expense ratio).

To put some perspective on that, here is what a 0.17% fee (difference between VTI 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 roughly ~$139,000 less in your account due to the fee because of the extra 0.17% 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 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 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 $135 billion in total assets.

 

QQQ Holdings

QQQ is the fourth-most popular ETF in the world, 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 largely made up of Apple, Microsoft, Amazon, and Tesla.

 

Which is Better VTI or QQQ?

VTI and QQQ are different investments.  VTI offers more diversification since it holds about 35 times as many stocks.  However, this has resulted in a lower performance over the last 10 years.

Even so, I would say both are excellent options for long-term investors.

However, if having a larger basket of stocks and the lowest fees helps you sleep at night, then VTI would be a better option.

If you are looking for a Vanguard ETF that is most similar to QQQ, you can see my comparison of VGT vs QQQ

Lastly, it’s important to consider costs and fees because they can add up 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 VTI, QQQ, and thousands of other stocks/ETFs.

Similar Comparisons:

 

Is VTI or QQQ Better for Financial Independence?

Both VTI and QQQ can get you to Financial Independence Retire Early (FIRE).  This is because they both have performed great and have low expense ratios.

Being part of the FIRE community, I know we aim for the lowest fees possible, and we’re a big fan of Vanguard.

 

FIRE Calculator

Calculate Your FI Number With My Free FIRE Calculator

 

My Winner: VTI

My winner is VTI for its diversification, lower expense ratio, and the fact that I love Vanguard.

Vanguard is a brokerage that is investor-owned which likely means they will continue to offer low-cost ETFs.

 


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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