To The Moon

Choosing between two great investment options, QQQ vs SPY, is not easy. They are both great funds and popular among investors and traders alike. Most people would be more familiar with S&P 500 butnot too sure about QQQ. Let's break it down so that we can make informed decisions on which one to choose for long term investment and short term trades.

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

- SPDR S&P 500 ETF Trust, SPY, invests in 500 of the largest companies in the United States and accounts for about three-quarters of the U.S. stock market’s value.

QQQ vs SPY Holdings

QQQ is 63% technology, while SPY is 34%. SPY is a broad-based fund diversified in several sectors of the market. 

QQQ is heavily weighted in the technology sector. QQQ is the fourth-most popular ETF in the world, with 102 securities holdings, most of which are top technological companies. QQQ excludes financial companies unlike SPY.

QQQ tracks the Nasdaq-100 Index

- Fund Inception: 1999

- Expense Ratio: 0.20%

- Invesco Fund

- Number Of Stocks: 100

- Top 10 Holdings: 52%

- Has Outperformed SPY Over 10 Years

- Higher Volatility Compared To SPY

QQQ top 10 holdings

SPY tracks the S&P 500 Index

- Fund Inception: 1993

- Expense Ratio: 0.09%

- State Street Fund

- Number Of Stocks: 506

- Top 10 Holdings: 28%

- Yield 1.20%

- Similar ETF (VOO)

SPY top 10 holdings

The top 10 holdings for QQQ make up 52% of its portfolio, while SPY’s top 10 holdings make up 28%.

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

A significant difference between SPY and QQQ is their number of holdings. SPY holds 506 companies, while QQQ only holds 100 companies. Therefore, SPY holds five times as many stocks compared to QQQ and considered a more diversified ETF to QQQ.

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: 20% ROI per year

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

Since its inception, QQQ has shown incredibly good 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.

SPY Performance

Over the last 10 years, SPY has had an average return of 15% annually. This is almost the same as the performance of the S&P 500 over the same time frame. SPY’s goal is to mirror the results of the S&P 500 index.

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

SPY: 15% ROI per year

So Which ETF Is More Suitable For Me?

QQQ and SPY are two different investment tools. Over the long term, SPY 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.

SPY offers stable long-term returns with more diversification and at a lower cost.

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

If having a larger basket of stocks helps you sleep at night, then SPY would be a better option. If you seek the highest possible returns and can handle the increased volatility, QQQ offers better returns at a higher risk.

QQQ performs better than SPY today

⚠️ As the looming banking crisis continues, QQQ could be a better bet since the financial sectors are excluded from its holdings. Moreover, funds are flowing into big tech since March 2023 making QQQ more attractive for trading. The Tiger chart above reflects the percentage gain on Thursday, 23 March of +0.27% for SPY and +1.19% for QQQ. Invest safe and trade on! 💪😉

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