People prefer buying low fee S&P 500 (SPY) funds over Nasdaq 100 (qqq) because they are safer, less volatile, less risky, have a broader range of sectors and companies SPY (oil, banks, tech, insurance, industrial, consumer goods, telecom, utilities, etc) while QQQ has different sectors it is primarily innovation.
According to the Invesco website and its public filings, QQQ has generated a return of 156.77% compared to the S&P 500 Index's 107.92%. QQQ's 10-year returns of 421.53% radically outpace the S&P 500 Index's 250.02% and a $10,000 investment in QQQ 10 years ago would be worth $52,153 today.
QQQ has a relatively low expense ratio of 0.20%, making it an attractive option for cost-conscious investors. Its high liquidity, with an average daily trading volume of well over 30 million shares for years, ensures that investors can easily buy and sell shares.
XLK, VGT, IYW (pure tech) have all outperformed the QQQ over the last 5y and 10 y (by about 100%). If you want tech, get a pure tech fund . if you want growth get growth, (VUG for example). if you want the top 100 companies, there is OEF.
Investing in QQQ is riskier, but it comes with the potential for higher rewards since this fund invests heavily in tech-related stocks, which are prone to rapid growth during a bull run. VOO fund invests in the S&P 500, so it has five times as many holdings as QQQ, providing you with instant diversification.
The S&P 600 index, which tilts toward small-cap value, has outperformed the Invesco QQQ Trust ETF since its inception in 1999, despite the Nasdaq ETF's incredible performance over the past decade. The Avantis US Small Cap Value ETF (AVUV -0.15%) is one of the best ways to invest in small-cap value stocks.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
The 5-year cumulative return for Invesco QQQ is +148.29%, meaning $10,000 invested in Invesco QQQ 5 years ago would be worth $24,829 today. Source: Morningstar Inc.
In a comparative study between the Nasdaq 100 and the S&P 500, the Nasdaq 100 outperformed the S&P 500 every year from 2008 to 2023 posting a total average return of +17.5% compared to the S&P 500 return of 9.2%. A notable exception is 2022 when the Nasdaq 100 underperformed relative to the S&P 500 by -14.3%.
Invesco S&P 500 Momentum ETF (SPMO)
SPMO holds $4 billion in total assets and has consistently outperformed the S&P 500. Over the past five years, SPMO has an annualized total return of 19.1%, compared with the S&P 500's 12.3%. Low commission rates start at $0 for U.S. listed stocks & ETFs*.
The QQQ price increases more than the S&P 500 during bull markets. Long-term growth potential: QQQ holdings include many companies that develop new technologies. That gives the QQQ ETF more potential for long-term growth. QQQ is also much more diversified across the growth technology sector.
What are the risks of the SPY ETF? While SPY is a cost-effective and highly liquid investment option for investors, it's also subject to the same risks as any other investment in the stock market, including market volatility, and economic and geopolitical risks.
Average Return
In the past year, QQQ returned a total of 24.57%, which is slightly higher than VOO's 23.44% return. Over the past 10 years, QQQ has had annualized average returns of 18.38% , compared to 13.11% for VOO. These numbers are adjusted for stock splits and include dividends.
Motilal Oswal Flexi Cap Fund and Motilal Oswal Small Cap Fund gave 50.23% and 49.29% returns respectively in the mentioned period. Motilal Oswal Large & Midcap Fund offered 48.84% return in the same time period. HDFC Defence Fund, the only active fund based on defence sector, delivered 48.75% return in 2024.
Berkshire Hathaway owns two exchange-traded funds (ETF), The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the Vanguard S&P 500 ETF (NYSEMKT: VOO). Both of these ETFs track the S&P 500.
For example, you might buy SPY if you want to trade actively, or even venture into day trading, because of its high volume. You might consider buying VOO to hold over the long term because of its lower expenses.
VOO and IVV boast the lowest management fee at 0.03%, about one-third of the SPY ETF. While the difference between a 0.03%, and 0.0945% expense ratio may seem trivial, such fees can really add up.
Furthermore, SPY is less top-heavy, with the top 15 holdings accounting for 39.79% of the portfolio, compared to 57.55% for QQQ. If you're looking for broad diversification, SPY is the clear winner. For mega-cap growth exposure with a tech tilt, QQQ is the better choice.
QQQ stock is one of the most-popular exchange-traded funds in the world, holding more than $300 billion in investors' assets. It tracks the Nasdaq-100 index, which owns the most valuable nonfinancial stocks on the Nasdaq. QQQ is also the largest ETF that tracks a narrower slice of the stock market.
After another banner performance for the Invesco QQQ Trust ($QQQ) in 2024, some investors may be concerned that it's “too late” to invest in the dynamic, tech-centric ETF. However, strong returns are par for the course of this proven winner with a long track record of outperformance.