QQQ vs SPY: Side-by-Side ETF Comparison

QQQ vs SPY boils down to growth concentration versus broad market exposure: QQQ's 51% tech weighting delivered a 17.5% one-year return but costs 0.20% annually and yields just 0.46%, while SPY's diversified 34% tech allocation returned 14.36% with half the expenses at 0.10% and a 1.07% dividend yield. The NASDAQ-100 tracker trades at a 25 P/E versus the S&P 500's 22, reflecting its premium for growth-focused companies.

Table of Content

• Annual & Cumulative Returns
• Risk Metrics
• Dividend Yield & Growth
• Fees & Liquidity
• ETF Composition: Asset Classes
• Regional Allocation
• Sector Weights
• Top 10 Holdings
• Valuation & Growth Metrics
• Which ETF Fits Your Portfolio?
• FAQ

ETF Issuers & Investment Objective

Invesco runs QQQ, which tracks the NASDAQ-100, a growth-heavy basket that leans 51% into technology and another 16% into communication services. That tilt pushes the portfolio’s P/E to 25× earnings, about three points above the broad market, and explains the slim 0.46% dividend yield growth companies simply hang on to more cash. State Street’s SPY, by contrast, owns the full S&P 500, so the same tech names appear but are capped at 34% of assets, with financials and healthcare filling the gap and pulling the valuation down to 22× earnings while lifting the yield to 1.07%.

Expense ratios line up the same way: SPY charges 0.10%, half of QQQ’s 0.20%, a difference that compounds quietly over decades. Investors choosing between them are really choosing between a focused growth bet and a wider, more balanced slice of large-cap America; the extra tech exposure has helped QQQ outperform by roughly three percentage points over the past year, but it also means sharper drawdowns when sentiment toward growth sours.

Annual & Cumulative Returns

QQQ's tech-heavy portfolio has delivered noticeably stronger returns over most time periods, particularly during the past three years where it outpaced SPY by 8.5 percentage points annually. The gap narrows over five years (just half a percentage point separates them), but QQQ's 10-year advantage of nearly 5 percentage points annually shows how consistently tech leadership has rewarded investors willing to accept more concentration risk.

The trade-off becomes clearer when you look at recent performance. QQQ's 17.5% one-year return beats SPY's 14.4%, but both funds posted nearly identical results in early 2024 with QQQ up 1.37% versus SPY's 1.07%. This suggests the tech rally that drove QQQ's longer-term outperformance may be cooling, or at least becoming more volatile. Investors choosing between these funds need to decide whether they're comfortable betting on continued tech dominance or prefer SPY's broader diversification across sectors.

Risk Metrics

QQQ's higher volatility isn't surprising given its tech-heavy makeup. The fund's 15.6% three-year volatility sits well above SPY's 11.9%, meaning investors face about 30% more price swings. That extra risk has paid off lately, with QQQ's three-year Sharpe ratio of 1.61 beating SPY's 1.39. The Sharpe gap shows QQQ delivered better returns per unit of risk taken, though both numbers indicate solid risk-adjusted performance.

The catch is that this trade-off requires steel nerves. QQQ's 1-year volatility of 15.6% versus SPY's 11% means larger daily swings and deeper drawdowns during market stress. Growth stocks simply move more than the broader market. SPY offers smoother sailing with its diversified blend, while QQQ gives you concentrated tech exposure with higher highs and lower lows. Your choice depends on whether you can stomach the extra volatility for potentially better risk-adjusted returns.

Dividend Yield & Growth

QQQ's 0.46% yield is barely half of SPY's 1.07%, which makes sense when you remember it's stuffed with growth names like Apple and Nvidia that prefer buybacks to payouts. Both send checks every quarter, yet the practical difference hits your pocket: park $100k in SPY and you'll collect about $1,070 a year, while the same stake in QQQ delivers only $460 enough to buy a nice tablet, not a laptop.

That income gap flips when earnings expand. Tech-heavy QQQ has the faster-growing dividend stream; over the past five years its payout has climbed roughly 12% annualized versus 8% for SPY. If you don't need cash now and would rather let compounding do the work, QQQ's lower starting yield can catch up within six or seven years. Just know you'll ride more volatility along the way, so match the choice to whether you want income today or growth tomorrow.

Fees & Liquidity

QQQ costs twice as much to own: 0.20% of assets each year versus SPY’s razor-thin 0.095%. On a $10,000 position that’s $20 vs. $9.50 small change in a single year, but a difference that compounds quietly over decades. Neither fund hits you with trading commissions; both trade millions of shares daily, so bid/ask spreads are typically a penny wide. Still, if you’re dollar-cost averaging every payday, the extra 0.105% drag from QQQ can add up to a couple of lattes a month on a six-figure account.

The real cost question is whether you’re willing to pay the higher fee for QQQ’s tech-heavy tilt. Over the past twelve months the spread worked in your favor QQQ beat SPY by about 3.1% but that gap can vanish faster than a software update. If you view the expense ratio as a bet on continued tech outperformance, size it accordingly; if you just want cheap, set-it-and-forget-it market exposure, SPY’s sub-0.1% price is hard to beat.

ETF Composition: Asset Classes

QQQ holds 96.3% in U.S. equities and 3.6% in foreign stocks, a mix that reflects the global reach of the Nasdaq-100’s mega-cap constituents. SPY tilts even more domestic, parking 99.1% in U.S. companies and barely half a percent abroad. The gap looks small on paper, but it matters when overseas revenue gets hit by currency swings or geopolitical flare-ups QQQ investors have slightly more insulation, while SPY owners are almost entirely tied to the domestic economy.

Neither fund keeps much dry powder; cash allocations are under 0.4% for both, so virtually all assets are working in the market at any given time. For traders, that means minimal cash drag and tight tracking error. Long-term investors should simply note that QQQ’s modest international slice can nudge returns if tech-heavy multinationals outperform, whereas SPY’s near-pure U.S. stance leaves little buffer when the dollar weakens or foreign markets rally.

Regional Allocation

QQQ's geographic footprint is almost entirely domestic, with 97.6% of holdings based in North America. The remaining sliver splits mainly between developed Europe (1.2%) and Latin America (0.6%), plus a rounding-error allocation to the U.K. and emerging Asia. SPY is even more concentrated: 99.5% of its constituents call North America home, leaving barely 0.5% scattered across the same overseas markets. In other words, neither fund gives you meaningful direct exposure to foreign economies, but QQQ leaves the door open a crack while SPY barely unlocks it.

For investors who want built-in international diversification, neither ETF delivers. You'll need to pair either one with separate developed- or emerging-market funds if that's the goal. The difference, though, is that QQQ's 2.4% overseas weighting is still four times larger than SPY's 0.5%, driven mostly by the handful of Nasdaq-listed companies that maintain European or Latin American headquarters. It's not enough to sway the risk profile, yet it does mean QQQ can pick up a touch of non-dollar revenue that SPY simply won't.

Sector Weights

QQQ's sector allocation reveals why it behaves so differently from the broader market. More than half the fund sits in technology stocks (51.3%), with another 16.2% in communication services - mostly the mega-cap tech giants that dominate both sectors. Add in consumer cyclicals at 13.1% and you're looking at roughly 80% of the fund concentrated in just three areas. That's a massive bet on tech-driven growth, especially when you notice financial services barely registers at 0.3%.

SPY tells a completely different story. Technology still leads at 34.2%, but that's a far cry from QQQ's tech concentration. The S&P 500 spreads its bets across financial services (12.7%), healthcare (9.7%), and industrials (8%), creating a more balanced exposure. This diversification shows up in the numbers - SPY holds 2.2% in utilities versus QQQ's 1.3%, and maintains meaningful positions in energy (3%) and real estate (1.8%) that QQQ essentially ignores. For investors, this means QQQ offers pure-play tech momentum when the sector rallies, while SPY provides a buffer when tech stumbles.

Top 10 Holdings

Both ETFs count the same three tech giants as their largest positions, but QQQ gives them significantly more weight. NVIDIA tops both lists, yet commands 8.6% of QQQ's portfolio compared to 7.6% in SPY - a gap that might seem small until you realize it represents billions in additional exposure. The concentration difference becomes starker when you add up the top five: these stocks represent 30.7% of QQQ's assets versus 26.6% in SPY, meaning QQQ investors have nearly one-third of their money riding on just five companies.

The composition reveals each fund's character. QQQ swaps out Alphabet for Tesla, giving investors direct exposure to the electric vehicle revolution that SPY lacks. This single substitution - Tesla at 3.8% versus no direct holding in SPY's top five - captures the growth-focused nature of QQQ versus SPY's broader approach. For investors, this means QQQ's performance will swing more dramatically based on how these mega-cap tech stocks perform, while SPY's slightly more distributed weighting provides a touch more diversification within its largest holdings.

Valuation & Growth Metrics

QQQ trades at a clear premium with a P/E of 25.1 versus SPY's 22.3, and the gap widens further on price-to-book: 6.4 times book value for the tech-heavy fund compared with 4.5 for the broad market portfolio. Those higher multiples aren't fantasy. Nasdaq-100 constituents have delivered faster sales growth (8.3% vs 8.0%) and meaningfully higher historical earnings expansion, 15.8% a year against 10.3% for the S&P 500. The market is paying up for companies that have actually grown faster, not simply for promises.

Whether the premium is justified comes down to patience and risk tolerance. Long-term earnings forecasts are nearly identical 10.8% for QQQ, 10.5% for SPY so future outperformance would need the growth gap to re-widen or multiples to stay elevated. If tech falters or rates rise, the fund sporting a 5.0 price-to-sales ratio has more room to compress than the one at 3.1. Investors comfortable riding that volatility may accept the richer valuation; those who prefer a margin of safety can get roughly the same expected earnings growth for 11% less money by owning the whole market instead.

Which ETF Fits Your Portfolio?

If you want pure growth exposure and don't mind riding the tech roller coaster, QQQ delivers with its 17.5% one-year return. The fund's 51% weighting in technology stocks means you're essentially betting on the sector continuing to lead. Just know you'll pay twice the expense ratio (0.20%) compared with SPY while collecting a minimal 0.46% dividend yield.

SPY offers the steadier path. Its 1.07% yield provides actual income, the expense ratio stays under 0.10%, and you're getting a true cross-section of American business instead of a tech-heavy bet. The trade-off? You'd have given up about three percentage points of returns over the past year. For most investors, that diversification cushion is worth the modest underperformance.

If you want to have look at other ETF comparisons, check out this: Fund Overlap Tool

Data sources: The data has been obtained from the ETF provider's website and ETF fact sheet.

FAQ

What’s the difference between QQQ and SPY?

QQQ tracks the tech-heavy Nasdaq-100 and charges 0.20%, while SPY follows the broader S&P 500 for half the fee at 0.10%. The growth tilt shows in the numbers: QQQ's 10-year return of 20.51% beats SPY's 15.63%, but it comes with higher volatility (15.64% vs 10.98% over one year). Your choice depends on whether you want concentrated tech exposure or diversified large-cap coverage.

Which ETF has delivered higher historical returns?

QQQ has delivered higher historical returns across all time periods, with a 10-year annualized return of 20.51% compared to SPY's 15.63%. The tech-heavy fund also outperformed over the past year, returning 17.5% versus SPY's 14.36%.

Which ETF has the lower expense ratio?

SPY costs half as much to own, charging 0.10% annually compared to QQQ's 0.20%. That 0.10% difference means you'll pay $10 more in fees each year for every $10,000 invested in QQQ.

Does QQQ outperform the S&P 500?

QQQ has outperformed SPY recently, with 17.5% versus 14.36% over the past year. The gap widens over longer periods, QQQ's 10-year return of 20.51% significantly exceeds SPY's 15.63%.

Does QQQ pay dividends?

Yes, QQQ pays dividends, though the yield is modest at 0.46%. That's less than half of SPY's 1.07% yield, which makes sense given QQQ's heavy tech focus. Growth companies typically reinvest earnings rather than pay them out.

Which ETF is more volatile?

QQQ is significantly more volatile than SPY, with 1-year volatility of 15.64% compared to SPY's 10.98%. The gap remains similar over three years, QQQ at 15.56% versus SPY at 11.94%. This higher volatility reflects QQQ's concentrated tech exposure, where a single sector represents over half the portfolio.

How do QQQ’s and SPY’s sector exposures differ?

QQQ puts more than half your money in tech stocks (51.3%) with another 16.2% in communication services, making it heavily concentrated in growth-oriented sectors. SPY spreads things out more: tech still leads at 34.2%, but financial services grabs 12.7% and you get meaningful exposure across healthcare, industrials, and consumer staples that QQQ barely touches. This difference explains why QQQ's returns swing wider - when tech rallies, it rallies hard, but it also falls further when growth stocks sell off.

Which ETF is better for growth investors?

QQQ's 20.51% ten-year return versus SPY's 15.63% shows it's delivered stronger growth, largely thanks to its 51% tech allocation. The trade-off is QQQ's higher volatility at 15.64% versus SPY's 10.98%, plus a steeper 25x P/E ratio. Growth investors comfortable with tech concentration and bigger price swings might prefer QQQ, while those wanting steadier growth across sectors may find SPY fits better.

Which ETF is better for income investors?

Neither QQQ nor SPY is ideal for income investors. SPY's 1.07% dividend yield is more than double QQQ's 0.46%, but both are quite low compared to dividend-focused ETFs. If steady income is your priority, you'd likely be better served by funds specifically designed for dividend generation rather than these growth-oriented options.

Can I hold both QQQ and SPY in my portfolio?

Yes, you can absolutely hold both QQQ and SPY together - many investors do this to blend growth-focused tech exposure with broader market coverage. QQQ's 51% technology allocation and 15.6% volatility complements SPY's more balanced sector mix and lower 11% volatility. The two funds share top holdings like NVIDIA, Apple, and Microsoft, but QQQ's concentration in growth stocks versus SPY's 500-company diversification gives you different risk-return profiles in one portfolio.