QQQ vs IVV: Side-by-Side ETF Comparison

Which one is better? QQQ offers higher growth potential but comes with more risk, while IVV provides broad diversification with lower volatility and cost. For most investors, IVV is the safer long-term bet, while QQQ suits those bullish on tech and innovation.

ETF Issuers & Investment Objective

• QQQ: Managed by Invesco since its launch in 1999, QQQ mirrors the NASDAQ-100 Index. It primarily consists of large-cap companies with a strong emphasis on the technology sector and innovation-focused industries.
• IVV: Managed by iShares since its inception in 2000, IVV closely tracks the S&P 500 Index, capturing a diverse range of large-cap companies across multiple sectors, offering investors broad market exposure.

Annual & Cumulative Returns

When looking at the returns, QQQ has consistently outperformed IVV across all major time periods, especially over the past 3, 5, and 10 years. This outperformance reflects QQQ’s concentrated exposure to high-growth technology companies, which have driven much of the market’s gains in recent years. However, this higher return comes with increased volatility and risk, making it more suitable for investors who can tolerate short-term swings for the potential of long-term growth. In contrast, IVV’s steadier returns are the result of broader sector diversification, offering a more balanced and defensive profile, especially during market downturns. The nearly 5% gap in 10-year annualized performance is significant, but it should be weighed against each investor’s risk tolerance and investment goals.

Risk Metrics

QQQ’s higher volatility figures both in the short and long term, stem from its concentrated exposure to technology and growth stocks, which tend to fluctuate more dramatically than the broader market. This greater price movement translates into potentially higher returns but also more pronounced dips during market downturns.

In contrast, IVV's lower volatility reflects its broader sector diversification and inclusion of more defensive stocks like financials and healthcare. Despite the higher risk, QQQ also posts a slightly better Sharpe ratio, suggesting that it has historically offered more return per unit of risk over the past three years.

• Volatility reflects the degree of price fluctuations; higher volatility often correlates with greater risk and potential returns.
• Sharpe Ratio measures risk-adjusted returns, where higher ratios indicate more favorable returns for the risk assumed.

Dividend Yield & Growth

• QQQ: Dividend Yield approximately 0.91%, paid quarterly. Suitable for investors more focused on capital appreciation than income.
• IVV: Dividend Yield around 1.50%, also paid quarterly. A higher yield attractive to income-focused investors.

While both QQQ and IVV pay dividends quarterly, IVV stands out with a higher yield of approximately 1.50%, compared to QQQ’s 0.91%. This difference reflects each fund’s focus IVV holds a broader mix of dividend-paying companies across sectors like financials and healthcare, whereas QQQ is concentrated in tech and growth stocks, which tend to reinvest profits rather than distribute them as dividends. For investors seeking regular income or building a dividend-focused portfolio, IVV offers a more reliable stream, while QQQ is better suited for those prioritizing capital gains over yield.

Fees & Liquidity

Both QQQ and IVV offer excellent liquidity, with minimal bid-ask spreads and high trading volume, ensuring smooth transactions even for large trades. While QQQ’s daily trading activity is among the highest in the ETF universe, IVV also boasts strong volume, making both funds ideal for active traders and institutional investors alike. These liquidity advantages help reduce trading costs and make entering or exiting positions more efficient, especially in volatile markets.

Explanation:

• Expense Ratio is the annual fee taken by the fund manager, expressed as a % of your investment.
• Bid-Ask Spread is the difference between the buying and selling price. Smaller spreads mean lower transaction costs.

ETF Composition: Asset Classes

Both QQQ and IVV are equity-focused ETFs, but their asset composition reveals slight differences in strategy. IVV allocates nearly 99.5% to U.S. stocks, offering extremely pure domestic market exposure, which aligns with its goal of tracking the S&P 500 a broad benchmark of American large-cap companies.

QQQ, on the other hand, has a slightly more diversified profile with around 2.6% in non-U.S. equities. This is a result of the NASDAQ-100 occasionally including global firms that are listed on the NASDAQ exchange. The small cash allocation in both ETFs is typical and serves operational purposes like managing inflows and outflows.

Neither fund invests in bonds or other asset classes, which keeps them fully equity-oriented and suited for investors seeking stock market growth rather than income or capital preservation.

Regional Allocation

Both QQQ and IVV are U.S.-focused ETFs, but QQQ shows slightly more regional diversification. IVV’s near-total allocation to North America (99.48%) reflects its objective of tracking the S&P 500, which exclusively includes large-cap U.S. companies.

QQQ, while still heavily weighted toward North America at over 97%, includes a handful of foreign companies listed on the NASDAQ, which accounts for small allocations to regions like Europe and the UK. This explains QQQ’s slightly higher exposure to developed markets outside the U.S., although the overall difference is minimal.

For most investors, both ETFs essentially behave like U.S.-only funds, with only marginal international influence.

Sector Weights

The sector weights highlight just how concentrated QQQ is in a few high-growth areas, especially technology, which makes up over half its portfolio. This heavy tilt reflects the NASDAQ-100’s composition, which is dominated by tech giants like Apple, Microsoft, and NVIDIA.

In contrast, IVV provides much broader sector exposure, including significant allocations to financials, healthcare, and industrials. These differences help explain IVV’s lower volatility and more balanced performance across market cycles. Sectors like consumer defensive and healthcare, which are more prominent in IVV, tend to offer stability during downturns something QQQ sacrifices in pursuit of higher growth.

Ultimately, QQQ’s focused exposure amplifies potential gains (and losses), while IVV’s diversified mix is better suited for investors seeking steadier, all-weather returns.

Top 10 Holdings

The top holdings reveal QQQ’s heavy concentration in mega-cap technology and growth stocks, with over 8% allocated each to Microsoft, NVIDIA, and Apple alone. This reflects QQQ’s tracking of the NASDAQ-100, which favors high-performing, innovation-driven companies in sectors like tech, e-commerce, and digital media.

IVV, on the other hand, tracks the broader S&P 500 and holds a more balanced top 10, with smaller individual weightings and inclusion of companies like Berkshire Hathaway and both Alphabet share classes for broader sector and structural representation.

Notably, QQQ includes firms like Netflix and Costco that are not present in IVV’s top 10, further highlighting its tech and consumer focus. This top-heavy structure gives QQQ the potential for outsized gains in bull markets, but also increases its vulnerability during tech sector pullbacks, whereas IVV’s diversification provides more stability.

Valuation & Growth Metrics

Valuation Ratios

The valuation ratios clearly illustrate the growth-oriented nature of QQQ compared to the broader, more value-balanced profile of IVV. QQQ trades at significantly higher multiples across the board, whether looking at price-to-earnings, price-to-book, or price-to-sales, because it holds a concentrated basket of high-growth tech companies that investors expect to deliver strong future earnings. These elevated valuations are common for firms in innovation-driven sectors like cloud computing, AI, and semiconductors.

IVV, by contrast, includes a wider mix of industries such as financials, healthcare, and industrials, which tend to have more moderate growth but steadier cash flows and dividends.

This explains why IVV offers a higher dividend yield and appears more attractively valued for income-focused or risk-averse investors. Ultimately, QQQ’s higher valuations are a trade-off for greater potential upside, but also come with heightened sensitivity to changing market sentiment.

Explanation:

• P/E Ratio = Price divided by earnings. Indicates how expensive a fund is relative to profits.
• Price/Book = Price vs book value (assets minus liabilities).
• Price/Sales = Price relative to total revenue.
• Price/Cash Flow = Price relative to how much cash the companies generate.

Growth Expectations

The growth expectations data underscores QQQ’s appeal to investors seeking aggressive capital appreciation. QQQ shows significantly higher historical earnings, cash flow, and book value growth than IVV, reflecting its concentration in high-growth sectors like technology and consumer innovation.

These companies have delivered rapid gains over the past decade, which is evident in their superior performance metrics.

However, IVV actually edges out QQQ slightly in projected long-term earnings growth, likely due to analysts expecting tech growth to moderate while other sectors rebound. IVV’s more balanced composition across mature industries results in steadier, though generally slower, historical growth, but that also makes its forward growth outlook appear more stable.

For investors prioritizing strong past performance and innovation-driven momentum, QQQ offers the edge; those looking for consistent, diversified growth may favor IVV.

Which ETF Fits Your Portfolio?

Choosing between QQQ and IVV comes down to your investment priorities—growth potential, stability, or cost-efficiency.

If you're a long-term investor with a high risk tolerance, QQQ may be the better fit. Its concentrated exposure to technology and innovation-driven companies has historically delivered strong returns, especially during bull markets. However, it also comes with higher volatility and lower income, so it suits investors who can weather short-term swings in exchange for long-term upside.

On the other hand, IVV is ideal for investors seeking broad, stable, and low-cost exposure to the U.S. stock market. With balanced sector weights, a higher dividend yield, and significantly lower fees, IVV is well-suited for buy-and-hold investors, those near retirement, or anyone focused on reliable growth with lower risk.

For cost-conscious investors, IVV’s 0.03% expense ratio makes it one of the most efficient ways to invest in the U.S. equity market. Meanwhile, QQQ can complement a diversified portfolio as a tactical satellite position for those who want extra tech exposure.

In summary:

• Choose QQQ if you're bullish on tech and want growth at the cost of higher risk.
• Choose IVV if you prefer diversification, stability, and lower expenses for the long haul.
• Consider owning both to blend broad market exposure with growth-focused upside.