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VOO costs a a lot decrease expense ratio and presents the next dividend yield than QQQ
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QQQ has outperformed VOO over the previous 12 months and 5 years however with deeper historic drawdowns
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VOO spreads danger throughout extra sectors and holdings, whereas QQQ leans closely on know-how shares
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The Invesco QQQ Belief, Sequence 1 (QQQ) stands out for its tech-heavy focus and up to date efficiency, whereas the Vanguard S&P 500 ETF (VOO) presents broader diversification, decrease charges, and the next yield.
Each QQQ and VOO are among the many hottest exchange-traded funds within the U.S., however they serve totally different funding priorities. QQQ tracks the NASDAQ-100 Index and emphasizes large-cap know-how, whereas VOO tracks the S&P 500 Index, representing the broader U.S. inventory market. Right here’s how they evaluate on price, returns, danger, and what’s inside.
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Metric
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QQQ
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VOO
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Issuer
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Invesco
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Vanguard
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Expense ratio
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0.20%
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0.03%
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1-yr return (as of 2025-11-28)
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21.5%
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13.5%
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Dividend yield
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0.5%
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1.1%
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Beta
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1.10
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1.00
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AUM
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$403.0 billion
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$1.5 trillion
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Beta measures worth volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents whole return over the trailing 12 months.
VOO seems to be extra reasonably priced with its 0.03% expense ratio, undercutting QQQ’s 0.20% charge, and likewise stands out for the next dividend yield, which might attraction to buyers searching for earnings alongside development.
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Metric
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QQQ
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VOO
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Max drawdown (5 y)
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-35.12%
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-24.52%
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Development of $1,000 over 5 years
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$2,067
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$1,889
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VOO tracks the S&P 500 Index, holding 505 corporations and providing publicity throughout sectors: 36% in know-how, 13% in monetary companies, and 11% in shopper cyclicals. Its high positions embody NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), every representing lower than 0.1% of the fund. With over 15 years out there, VOO might attraction to buyers searching for broad, low-cost protection of the U.S. large-cap universe.
In distinction, QQQ supplies a extra concentrated guess on large-cap development, with 54% in know-how, 17% in communication companies, and 13% in shopper cyclicals. Its largest holdings—NVIDIA, Apple, and Microsoft—carry barely increased particular person weights than in VOO. QQQ’s narrower focus means better sensitivity to tech sector swings, whereas VOO’s breadth spreads danger extra broadly.
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Merely put, these are two of my favourite ETFs. The Invesco QQQ Belief, Sequence 1 (QQQ) and the Vanguard S&P 500 ETF (VOO) are each compelling funding choices, however let’s break down what makes each stand out.
To begin, let’s concentrate on one key distinction: Every fund’s expense ratio. The QQQ has an expense ratio of 0.20%, which is cheap and under the typical ETF expense ratio of round 0.45%. Nonetheless, the VOO presents a rock-bottom expense ratio of 0.03%. That is about as low of an expense ratio as you will ever see, and it provides the VOO the sting on this key class.
Second, let’s study efficiency and composition. The QQQ is extra closely weighted to megacap tech shares. That has its advantages and disadvantages. In the long run, its focus in know-how shares has powered the QQQ’s glorious efficiency historical past. The QQQ boasts a 10-year compound annual development fee (CAGR) of 19.2% — simply besting the VOO’s CAGR of 14.4%. But, on the opposite facet of the ledger, QQQ’s heavy focus of massive tech shares makes it extra unstable throughout market corrections and bear markets. The QQQ’s max five-year drawdown of -35% is considerably steeper than the VOO’s -24%.
In sum, each of those ETFs are glorious decisions for almost any funding portfolio. Maybe the one important draw back to those ETFs are their meager dividend yields (1.1% for VOO and 0.5% for QQQ), which can trigger income-oriented buyers to look elsewhere. In any other case, these ETFs’ broad diversification, low expense ratios, and glorious long-term efficiency historical past make them ETFs that each investor ought to know.
ETF (Alternate-Traded Fund): An funding fund traded on inventory exchanges, holding a basket of property like shares or bonds.
Expense ratio: The annual charge, as a proportion of property, {that a} fund costs to cowl working prices.
Dividend yield: The annual dividends paid by a fund or inventory, expressed as a proportion of its worth.
Beta: A measure of an funding’s volatility in comparison with the general market, usually the S&P 500.
AUM (Property Below Administration): The whole market worth of property {that a} fund manages on behalf of buyers.
Max drawdown: The biggest proportion drop from a fund’s peak worth to its lowest level over a particular interval.
Development of $1,000: The rise in worth of a $1,000 funding over a given time, together with worth modifications and dividends.
Massive-cap: Corporations with a big market capitalization, usually thought-about steady and established.
Sector: A bunch of corporations that function in the identical space of the financial system, comparable to know-how or monetary companies.
Index: A statistical measure representing a gaggle of shares, used to trace market efficiency (e.g., S&P 500, NASDAQ-100).
Diversification: Spreading investments throughout numerous property or sectors to scale back danger.
Drawdown: A decline in funding worth from its peak to its lowest level earlier than recovering.
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Jake Lerch has positions in Invesco QQQ Belief and Nvidia. The Motley Idiot has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
Evaluating Two of the Prime Purchase-and-Maintain ETFs for Retail Traders: QQQ vs. VOO was initially printed by The Motley Idiot
