Is QQQ a large-cap growth fund?
5-star Morningstar rating
Like the Nasdaq 100, QQQ holdings are heavily weighted toward large-cap technology companies. Assets under management (AUM) at QQQ were $154 billion as of Q3 2022.
Invesco QQQ is an exchange-traded fund (ETF) that features Apple, Google, Microsoft, and more. Invesco QQQ ETF tracks the Nasdaq-100® Index — giving you access to the performance of the 100 largest non-financial companies listed on the Nasdaq. The fund and the index are rebalanced quarterly and reconstituted annually.
Has QQQ outperformed the S&P 500? According ETF comparison tools, the average annual return of the QQQ over the past 10 years has been 18.41% compared to about 12.75% for the S&P 500.
VGT - Performance Comparison. In the year-to-date period, QQQ achieves a 3.78% return, which is significantly higher than VGT's 2.61% return. Over the past 10 years, QQQ has underperformed VGT with an annualized return of 18.25%, while VGT has yielded a comparatively higher 19.98% annualized return.
5-star Morningstar rating
As of March 31, 2024, Invesco QQQ had an overall rating of 5 stars out of 1,111 large-cap growth funds for a 10-year period, based on risk-adjusted return.
- iShares® ESG Advanced MSCI USA ETF.
- Vanguard Growth ETF.
- Direxion NASDAQ-100® Equal Wtd ETF.
- JPMorgan US Momentum Factor ETF.
- Vanguard Mega Cap Growth ETF.
- iShares Morningstar Growth ETF.
- iShares Core S&P US Growth ETF.
USAA Nasdaq-100 Index Fund's holdings and breakdown are virtually identical to the QQQ, which is to be expected. They both just track the index.
QQQ is managed by Invesco, while ONEQ is managed by Fidelity. Both QQQ and ONEQ are considered high-volume assets.
Our ETFs can be tax-efficient investments that provide access to index-based and actively managed strategies. Our tax-efficient ETF lineup includes: 180+ ETFs that haven't paid a single capital gains distribution in the past five years, including RSP, QQQM, and BKLN.
What is the downside to investing in QQQ?
The number one biggest problem with Invesco QQQ Trust is that a small number of stocks make up a large percentage of the fund. That's not the fund's fault, it is simply tracking the index. But you can't ignore this lack of diversification.
An expensive investment
The Invesco QQQ Trust is a relatively inexpensive fund, given its 0.2% ETF expense ratio. However, the stocks in the fund are rather expensive. The Nasdaq 100 currently trades at 30.6 times earnings and 27.3 times the forward price-to-earnings (P/E) ratio.
QQQ appears to be the single best long-term investment option for investors seeking total returns due to its ability to expose holders to top U.S. companies on an ongoing basis. The Nasdaq 100 has consistently outperformed the S&P 500 in terms of total returns, making it a favorable choice for long-term investors.
Average Return. In the past year, QQQ returned a total of 39.12%, which is significantly higher than VOO's 27.70% return. Over the past 10 years, QQQ has had annualized average returns of 18.40% , compared to 12.59% for VOO. These numbers are adjusted for stock splits and include dividends.
| Ticker | Company | Performance (Year) |
|---|---|---|
| VGT | Vanguard Information Technology ETF | 30.75% |
| VFMO | Vanguard U.S. Momentum Factor ETF | 27.30% |
| VOOG | Vanguard S&P 500 Growth ETF | 26.64% |
| MGC | Vanguard Mega Cap 300 Index ETF | 25.51% |
Because of this, QQQ is an excellent option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well. The iShares Russell 1000 Growth ETF (IWF) and the Vanguard Growth ETF (VUG) track a similar index.
A history of outperformance. Invesco QQQ — the ETF that tracks the Nasdaq-100 index — has beaten the S&P 500 nine out of the last 10 years. Source: Morningstar Inc. Data begins 10 years prior to the ending date.
Looking back at 2022 when the growth-oriented Nasdaq-100 Index underperformed the market, the free cash flow yield segment performed well. QQQ and VFLO have tended to work in opposite directions. That potentially makes them a complementary pair, effectively creating what we believe is an all-weather portfolio.
Invesco QQQ ETF
While many of the best growth ETFs are heavy in technology stocks, QQQ is really loaded up at 59% of the portfolio. It also has large positions in consumer discretionary (18%) and healthcare stocks (6%), as well as smatterings of a few other sectors.
- Nippon India Large Cap Fund - Direct Plan - Growth Plan. ...
- HDFC Top 100 Fund -Direct Plan - Growth Option. ...
- ICICI Prudential Bluechip Fund Direct Plan Growth. ...
- JM Large Cap Fund (Direct) - Growth. ...
- Invesco India largecap Fund Direct Plan Growth. ...
- Baroda BNP Paribas Large Cap Fund Direct Plan Growth Option.
How risky are large-cap growth funds?
Most are considered high risk and are generally best suited for individuals with a long-term investment horizon and a healthy risk tolerance.
| FUND(TICKER) | EXPENSE RATIO | 10-YEAR RETURN AS OF APRIL 1 |
|---|---|---|
| iShares Russell 1000 Growth ETF (IWF) | 0.19% | 15.78% |
| iShares S&P 500 Growth ETF (IVW) | 0.18% | 14.34% |
| Schwab U.S. Large-Cap Growth ETF (SCHG) | 0.04% | 15.95% |
| SPDR Portfolio S&P 500 Growth ETF (SPYG) | 0.04% | 14.45% |
That said, regardless of how lucrative the Invesco QQQ ETF has been, there are two ETFs I like more going into 2024: the Vanguard S&P 500 ETF (VOO 1.00%) and Vanguard Growth ETF (VUG 1.82%).
USA . Invesco QQQ Trust competes with SPDR SP, Vanguard, NVIDIA, SPDR Dow, and McDonalds; as well as few others. Analyzing Invesco QQQ competition allows you to expand the diversification possibilities of your existing portfolios and to get a better perspective on locking in new positions.
One of the few differences between these two funds is their expense ratio. The newer QQQM has a lower expense ratio by 0.05%. QQQM has an expense ratio of 0.15% compared to QQQ expense ratio of 0.20%. QQQM is a better option if you want to pay the lowest fees possible since its expense ratio is 25% smaller than QQQ.
