What ETF is better than QQQ?
For investors seeking an alternative to QQQ's mega-cap exposure, the
The Vanguard Growth ETF is a good mix of the two
The Vanguard Growth ETF focuses on large-cap growth stocks. It can be the sweet blend between the diversification of the Vanguard S&P 500 ETF and the growth-centric nature of many of the Invesco QQQ ETF's holdings.
One of the bigger winners of 2023 has been the Invesco QQQ ETF (NASDAQ: QQQ), which mirrors the Nasdaq-100 index. The Nasdaq-100 tracks the 100 largest nonfinancial stocks trading on the Nasdaq stock exchange. Its popularity has made it the second-most traded ETF in the U.S., based on daily volume traded.
The QQQ is more broadly diversified than the VGT, but it also comes with a higher expense ratio. So, the argument truly boils down to one of fit. If you are only going with one tech-heavy fund, the QQQ is probably the better choice because it offers a higher diversification factor.
| ETF | Assets under management | Expense ratio |
|---|---|---|
| Invesco QQQ Trust (ticker: QQQ) | $244 billion | 0.2% |
| VanEck Semiconductor ETF (SMH) | $14 billion | 0.35% |
| Consumer Discretionary Select Sector SPDR Fund (XLY) | $19 billion | 0.09% |
| Global X Uranium ETF (URA) | $3 billion | 0.69% |
Invesco QQQ Trust ETF (QQQ)
This ETF started trading in 1999, and it's managed by Invesco, a fund giant. This fund is the top-performing large-cap growth fund in terms of total return over the 15 years to September 2023, according to Lipper. Expense ratio: 0.20 percent.
| 1 | AXA IM Nasdaq 100 UCITS ETF USD Acc | +42.51% |
|---|---|---|
| 2 | Invesco Nasdaq-100 Swap UCITS ETF Dist | +42.50% |
| 3 | Amundi Nasdaq-100 II UCITS ETF Acc | +42.47% |
QQQ Cons. High bear market risk: Just as QQQ tends to outperform the S&P 500 during bull markets, it also often underperforms it during bear markets.
QQQM was welcomed as a better option for investors in the Nasdaq 100 index when launched in 2020. But its low AUM and volume were an initial concern. QQQM's price has outperformed QQQ especially in boom markets and pays a slightly higher dividend. But the outperformance varies from year to year.
- Top 7 ETFs to buy now.
- Vanguard 500 ETF.
- Invesco QQQ Trust.
- Vanguard Growth ETF.
- iShares Core SP Small-Cap ETF.
- iShares Core Dividend Growth ETF.
- Vanguard Total Stock Market ETF.
- iShares Core MSCI Total International Stock ETF.
Should I buy VGT or VOO?
Over the past 10 years, VGT has outperformed VOO with an annualized return of 20.71%, while VOO has yielded a comparatively lower 13.04% annualized return. The chart below displays the growth of a $10,000 investment in both assets, with all prices adjusted for splits and dividends.
Our pick for the best overall Vanguard ETF is Vanguard Total World Stock ETF. For a 0.07% expense ratio, Vanguard Total World Stock ETF offers a globally diversified exposure across over 9,500 stocks.
The Vanguard Growth Fund has an expense ratio of just 0.04% and offers a dividend yield of 0.62%. The Invesco QQQ Trust, meanwhile, is more expensive with an expense ratio of 0.20%, and it pays an identical dividend yield of 0.62%.
- 9 Safest Index Funds and ETFs to buy in 2024. ...
- Vanguard S&P 500 ETF (VOO 1.03%) ...
- Vanguard High Dividend Yield ETF (VYM -0.16%) ...
- Vanguard Real Estate ETF (VNQ -1.24%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT 0.93%) ...
- Consumer Staples Select Sector SPDR Fund (XLP -0.32%)
| Rank | Symbol | Fund Name |
|---|---|---|
| 1 | SPY | SPDR S&P 500 ETF Trust |
| 2 | IVV | iShares Core S&P 500 ETF |
| 3 | VOO | Vanguard S&P 500 ETF |
| 4 | VTI | Vanguard Total Stock Market ETF |
- #1. SPDR® Portfolio Corporate Bond ETF SPBO.
- #2. iShares Broad USD Invm Grd Corp Bd ETF USIG.
- #3. Goldman Sachs Acss Invmt Grd Corp Bd ETF GIGB.
The problem for most investors, and why it should probably be avoided by all but a select few, is that it tracks the Nasdaq-100 Index, which is quirky at best and highly concentrated in just a few stocks from one sector. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors.
The Fidelity Blue-Chip Growth ETF FBCG has jumped 58.7% in 2023 to become the best-performing U.S. fund, excluding ETNs and leveraged products, according to FactSet data. The WisdomTree U.S. Quality Growth Fund QGRW is up 56.2% this year, while the Invesco QQQ Trust Series I QQQ has risen 55.6% in 2023.
After watching it notch a spectacular gain of around 55% in 2023, many investors likely feel that it's too late for them to buy the Invesco QQQ ETF (NASDAQ:QQQ). But even after this massive rally, there's still plenty of reason to own QQQ for the long term.
- What Is an Income ETF?
- iShares International Select Dividend ETF (IDV)
- Schwab U.S. Dividend Equity ETF (SCHD)
- SPDR S&P Dividend ETF (SDY)
- Vanguard High Dividend Yield ETF (VYM)
- WisdomTree U.S. Quality Dividend Growth Fund (DGRW)
- iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
Is VOO and QQQ the same?
VOO provides diversified exposure to a wide range of sectors and large-cap companies, making it suitable for conservative investors seeking stability. In contrast, QQQ concentrates on the technology sector and innovation, potentially offering higher growth potential but with added risk.
Vanguard Information Technology ETF (VGT) has a higher volatility of 5.06% compared to Invesco QQQ (QQQ) at 4.48%. This indicates that VGT's price experiences larger fluctuations and is considered to be riskier than QQQ based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
For long-term buy-and-hold investors, the QQQ is a good choice to get broad exposure to the Nasdaq-100 Index. This may be used in conjunction with other index ETFs to create a well-diversified portfolio for the long run.
Building long-term wealth in the stock market
Over the past five years alone, QQQ has earned total returns of more than 132%, compared to the S&P 500's roughly 69% returns in that time. The fund's 10-year performance is even more promising, earning returns of more than 350%, while the S&P 500 saw returns of just 155%.
For investors looking at a relatively safe way to invest in the stock market while also trying to maximize their returns, QQQ can make for an excellent investment to consider. In five years, the fund has more than doubled in value.
