QQQ vs VOO: Comparing Popular Index ETFs

This article compares QQQ vs VOO — The Invesco QQQ Nasdaq 100 ETF and Vanguard’s S&P 500 ETF. 

Both are passively managed index ETFs popular with passive investors looking to match market returns.

The funds are excellent for dollar-cost averaging and compounding interest. Use a broker like M1 Finance to optimize the compounding effect by automating dividend reinvestment. 

Index ETFs track market indexes, such as the Dow Jones Industrial Average or the Russell 2000. 

QQQ and VOO track two of the most widely-watched U.S. stock market indexes: the Nasdaq-100 Index and Standard & Poor’s 500.

Both funds own shares of many of the largest U.S. companies and pay quarterly dividends. 

Bottom Line Upfront (BLUF)

Before I get into the details of QQQ vs VOO, it’s essential to keep the following in mind:

• QQQ is a technology-heavy index fund of 100 stocks. VOO is a broader and more diversified index fund of 500 stocks. 
• QQQ has historically outperformed VOO by a significant margin but has higher concentration risk and volatility (measured by beta). 
• Both funds are excellent, low-fee stock index fund options for your portfolio.
• QQQ holds only stocks listed on the Nasdaq stock exchange, which tend to be (but are not exclusively) technology stocks. VOO holds stocks that trade on both the Nasdaq and NYSE. QQQ also excludes financial stocks. 
• Both ETFs are available to purchase from any online broker. I recommend M1 Finance, which is best for dividend investing and dividend reinvestment. 
• If you have an account with Vanguard or Fidelity, you can own similar mutual funds (see the mutual funds section). 

Please note that both ETFs update their prospectuses regularly. The information referenced in this article will change over time.

The best resource for both funds is the respective company’s websites.

Here are links to the most updated information at Invesco and Vanguard. Consider the information on those pages to be the authoritative data source.

• Invesco QQQ Trust Nasdaq 100 ETF (QQQ)
• Vanguard’s S&P 500 Index ETF (VOO)

QQQ vs VOO Comparison

Side-by-Side

Here’s a side-by-side comparison of both ETFs. Scroll right on mobile.

A few noticeable differences comparing QQQ vs VOO:

• QQQ is an older fund tracing back to the year 1999. 
• VOO is larger, has more holdings, and a higher yield. 
• QQQ has outperformed VOO significantly over five and ten years.  
• QQQ has considerable concentration risk: 45%+ is invested in 10 stocks. 

Benchmark Indexes

QQQ tracks the Nasdaq 100 Index, a tech-heavy index of the largest U.S. technology stocks.

Visit this page for the latest information about the Nasdaq 100 index.

The Nasdaq-100 Index is a modified market capitalization-weighted index that measures the performance of 100 of the largest Nasdaq-listed non-financial companies. Companies that meet the selection criteria for eligibility. The Nasdaq rebalances the index quarterly.

VOO tracks the S&P 500 Index, one of the most widely-watched stock indexes worldwide.

Visit this page for the latest information about the S&P 500 index.

The S&P 500 Index is a float-adjusted market cap-weighted index, meaning the largest stocks comprise a proportionately high percentage of the index. Lower market cap stocks comprise a proportionately lower percentage of the index. 

A selection committee of financial market professionals chooses which stocks go into the index. The focus is primarily on large-cap stocks that are representative of the U.S. economy.

The committee does not try to “pick stocks” for market outperformance. Instead, they look at company size, stock liquidity, share float, and profitability, and it fits the index’s goal to reflect the broad, large-cap marketplace accurately.

Performance Chart

Here is a daily updated chart of a $10,000 investment performance in both QQQ vs VOO over ten years. Scroll right on mobile.

Note that this chart shows the net asset value (NAV) price performance of each ETF after dividend payments. 

Past performance is not indicative of future results. 

Either fund is suitable as a foundational stock ETF in your portfolio. QQQ is a growth ETF paying a smaller dividend, which some investors may prefer to lower taxable income.

See the table above for up-to-date three-, five-, and ten-year average annual performance records.

Dividend Payout Schedules

Both QQQ and VOO pay quarterly dividends. 

Investors receive quarterly dividend payments in March, June, September, and December.

Top Ten Holdings

Here are the top ten holdings for each index fund. Visit the links at the beginning of the article for the most updated lists. 

 

Learn more about VOO’s biggest holdings and all 100 stocks in the QQQ ETF.

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Fund Equivalents

QQQ equivalents are more challenging to find than VOO equivalents. 

The most obvious QQQ equivalent is QQQM.

Invesco created QQQM as a lower-cost alternative to QQQ. Since QQQ is so large, cutting the expense ratio would significantly cut revenue.  

By creating a QQQ alternative with lower fees, they can keep collecting the QQQ fees but build up a more competitive second fund for more cost-conscious investors.

The closest QQQ equivalent at Vanguard is the Vanguard Information Technology ETF (VGT), though these are not equal. 

VGT tracks the MSCI US Investable Market Information Technology Index and holds more than 300 stocks, while QQQ only holds 100 stocks. 

The VGT mutual fund equivalent at Vanguard is the Vanguard Information Technology Index Fund Admiral Shares (VITAX).

VOO has several equivalent mutual funds and ETFs because multiple index ETFs track the S&P 500.

Vanguard’s VOO mutual fund equivalent is the S&P 500 Index Fund Admiral Shares (VFIAX). Investors with an account at Vanguard who prefer mutual funds can consider this fund a VOO alternative.

The VOO equivalent mutual fund at Fidelity is the 500 Index Fund (FXAIX). Investors with an account at Fidelity who prefer mutual funds can consider this fund a VOO alternative.

The VOO equivalent ETF at iShares is IVV.

SPY is the VOO equivalent at State Street Advisors. 

Customers of online brokers that charge fees for mutual funds should use the VOO or QQQ ETFs instead of mutual funds.

Mutual funds trade differently than ETFs, which trade like stocks. 

ETFs are easier to own, and the price changes throughout the day. Mutual funds only trade at the market close. 

Active investors typically use ETFs for trading purposes or to buy and hold indexes when they can’t access index mutual funds.

For example, if you have an investing account with M1 Finance, you’d invest via ETFs instead of mutual funds. If your account is with Vanguard, you may benefit from using the index fund VFIAX because it’s slightly easier to reinvest capital gains and dividends. 

Best Broker to Buy QQQ or VOO

Here are my favorite online brokers for investing in ETFs and automatically reinvesting dividends. 

Fidelity and Vanguard are excellent choices for long-term retirement investors. You’re in good hands if your IRA or employer-sponsored plan is with either broker.

I recommend another broker for a more modern user experience that can also serve your banking, borrowing, and spending needs. 

Long-term investors may prefer an online broker better for dollar cost averaging and dividend reinvestment. 

I’m a big fan of the online brokerage M1 Finance. M1 Finance is a reliable, robust, no-fee online broker for beginner and intermediate investors. It’s easy to get started.

As your investing skills and portfolio mature, M1 is one of the best platforms to scale.

They also offer an integrated checking account and low borrowing rates. Read my complete M1 Finance review here. 

M1 Finance does not offer mutual funds. However, ETFs are plentiful. It’s my favorite online broker for everyday investing. 

The platform is more intuitive than old-school brokers because it’s built on a modern technology platform.

You create portfolio “pies” that contain all the stocks and ETFs you want to own and in what percentages. Simply add an ETF to a pie and add funds to your account. 

Learn More about M1 Finance

Conclusion

Deciding between QQQ vs VOO comes down to preference for technology stocks that trade only on the Nasdaq vs all varieties of stocks that trade on the Nasdaq and NYSE.

Though QQQ is technology-heavy, it also holds consumer and retail stocks. VOO holds financials, utilities, and other companies excluded from the Nasdaq 100. VOO better represents the total U.S. economy, while QQQ generally represents newer companies and those in growing technology sectors.

However, VOO’s more encompassing reflection of the U.S. economy causes drag from legacy companies past their growth phase. 

QQQ has significantly outperformed VOO and tends to have higher volatility. Therefore, short-term losses are more likely if faced with market turmoil. Maintain a long-term investment horizon (10+ years) and dollar-cost average — invest fixed amounts regularly — into QQQ to reduce this risk. 

QQQ has a higher expense ratio than VOO, but the difference has not impacted long-term returns. Those looking for a lower-fee alternative for QQQ should choose QQQM. 

Purchase either ETF at any commission-free online broker. 

Please reply with your questions regarding QQQ vs VOO in the comments section below. Include any requests you have about adding more detail to this article. 

Additional Resources

• QQQ vs QQQM
• VTI or VOO?
• SCHD or VOO?
• FXAIX or VOO?
• SPY or VOO?

Disclosure: The author does not own either fund but may own a position in the top ten holdings of each fund. The opinions expressed are solely those of the authors and do not reflect the views of M1. They are for informational purposes only and are not a recommendation of an investment strategy or to buy or sell any security in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Prior to making any investment decision, you are encouraged to consult your personal investment, legal, and tax advisors.