QQQ vs VTI: Side-by-Side ETF Comparison

QQQ vs VTI boils down to growth focus versus total market exposure - QQQ's Nasdaq-100 concentration delivered 17.5% last year but costs 0.20% annually, while VTI's broader U.S. market tracking returned 14.07% with just 0.03% in fees. The tech allocation difference is striking: QQQ holds 51% in technology stocks versus VTI's 33%, explaining both the higher returns and steeper 25 P/E ratio.

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?

ETF Issuers & Investment Objective

Invesco's QQQ tracks the NASDAQ-100 Index, giving you concentrated exposure to 100 of the largest non-financial companies trading on NASDAQ. With over half the fund in technology stocks and a 0.20% expense ratio, QQQ essentially bets on big tech's continued dominance. The fund's 25 P/E ratio reflects this growth focus, and that 0.46% dividend yield shows most companies here prefer reinvesting profits over paying shareholders.

Vanguard's VTI takes the opposite approach, aiming to represent the entire U.S. stock market across all sizes and sectors. For just 0.03% annually - that's 85% cheaper than QQQ - you get everything from Apple to the smallest micro-caps, creating a more balanced portfolio where tech makes up a third rather than half. The 1.12% dividend yield and 21 P/E suggest a more value-oriented mix that won't shoot the lights out but won't leave you exposed if tech stumbles either.

Annual & Cumulative Returns

QQQ's tech-heavy portfolio has delivered superior long-term returns, outpacing VTI by roughly 5 percentage points annually over the past decade. The growth gap becomes even more pronounced over three years, where QQQ's 29.94% average annual return significantly exceeds VTI's 20.81%. This performance reflects the NASDAQ-100's concentration in high-growth technology companies that have dominated recent market cycles.

The trade-off becomes clearer when examining shorter timeframes. While QQQ leads over most periods, its recent one-year advantage of 3.43 percentage points is modest compared to longer-term patterns. VTI actually edges ahead slightly year-to-date, suggesting that market breadth has improved in 2024. For investors, this pattern indicates QQQ works best as a growth complement rather than a total portfolio replacement, since its concentrated exposure can lag during periods when value stocks or smaller companies take leadership.

Risk Metrics

QQQ's volatility tells a clear story about concentration risk. The 15.64% one-year swing rate sits 37% higher than VTI's 11.38%, which makes sense when you realize half the fund sits in tech stocks. That extra bumpiness hasn't hurt risk-adjusted returns though - QQQ's Sharpe ratio of 1.61 over three years means investors collected more reward per unit of risk than VTI's 1.29. The growth-heavy portfolio simply generated enough upside to justify the white-knuckle ride.

VTI's broader diversification shows up in smoother performance, but the gap narrows over longer periods. Three-year volatility drops to just 12.56% versus QQQ's 15.56%, a smaller 24% difference that suggests some of QQQ's dramatic swings even out with time. For investors who can stomach 40% higher short-term volatility, QQQ has delivered superior risk-adjusted returns. Those who prefer steadier progress might accept VTI's lower Sharpe ratio as a reasonable trade-off for fewer sleepless nights.

Dividend Yield & Growth

VTI's 1.12% yield is more than double QQQ's 0.46%, which makes sense when you consider what's inside each fund. VTI owns the entire U.S. market, including utilities, consumer staples, and financial companies that typically pay higher dividends. QQQ sticks to Nasdaq's growth-focused names where cash gets reinvested into expansion rather than paid out to shareholders.

The trade-off shows up in total returns - QQQ's tech-heavy portfolio delivered 17.5% over the past year while VTI gained 14.07%. If you're investing for income, VTI sends more cash your way each quarter. For pure growth, QQQ's lower yield reflects companies keeping profits to fund innovation. Both pay quarterly, so the difference comes down to whether you want higher current income or maximum reinvestment.

Fees & Liquidity

QQQ's 0.20% expense ratio means you'll pay $20 annually on a $10,000 investment - not outrageous, but nearly seven times what VTI charges. That 0.17 percentage-point gap might seem trivial, yet over decades it compounds into real money. On a $100,000 portfolio growing at 8% annually, the difference adds up to roughly $8,000 over 20 years.

VTI's razor-thin 0.03% fee reflects Vanguard's unique corporate structure where shareholders own the company itself. QQQ costs more partly because it tracks a specialized index requiring periodic rebalancing among just 100 stocks. For buy-and-hold investors, this fee difference favors VTI, though active traders might justify QQQ's higher cost if they believe tech concentration offers better return potential.

ETF Composition: Asset Classes

QQQ keeps almost nothing outside American companies - just 3.6% in foreign listings and a rounding-error 0.07% in cash. That’s the by-product of tracking the Nasdaq-100, which is dominated by mega-cap U.S. tech names. VTI stretches a bit deeper into the domestic market, parking 98.8% in U.S. equities while still keeping foreign exposure under one percent and holding about 0.4% cash. Both funds are essentially all-American stock bets; the difference is breadth, not geography.

What matters is how that slice is carved. QQQ’s 3.6% international weight comes mainly from dual-listed giants like MercadoLibre and a handful of Israel-based tech firms that happen to trade on Nasdaq. VTI’s 0.6% foreign slice is mostly micro-caps and ADRs that still meet its “investable U.S. market” rule. Either way, currency risk is negligible, but QQQ investors should know they’re getting a faint emerging-market flavor through Latin American e-commerce and Israeli semiconductors, while VTI keeps the profile almost purely domestic.

Regional Allocation

QQQ keeps nearly all its eggs in the North-American basket 97.6% of holdings are U.S.-listed firms while the remaining sliver is scattered across developed Europe, the U.K. and a touch of Latin American listings that happen to trade on Nasdaq. VTI is even more domestically tilted at 99.5% North America, but the difference is mostly rounding error; both funds are, for practical purposes, pure U.S. equity plays.

What this means is that neither ETF offers any meaningful hedge against a weak dollar or direct exposure to faster-growing foreign economies. If the greenback slides or overseas markets sprint ahead, both funds will feel it only indirectly through the global revenue mix of their American companies. Investors who want true geographic balance will need to pair either choice with a separate international holding.

Sector Weights

QQQ's sector allocation tells you everything about its DNA: more than half the fund sits in technology stocks, with another 16% in communication services. That's nearly 68% of your money concentrated in two related sectors. Add consumer cyclicals at 13% and you're looking at over 80% in growth-oriented areas. The fund barely touches traditional economy sectors - financial services gets 0.3%, energy 0.5%, and utilities 1.3% combined.

VTI spreads your risk across the entire market. Technology still leads at 33%, but that's 18 percentage points less than QQQ. Financial services claims 13% of assets, healthcare 10%, and industrials 9%. This matters when market sentiment shifts. During tech selloffs, QQQ feels the full impact while VTI's diversified mix provides some cushion. The trade-off? QQQ's concentration can deliver stronger returns when tech shines, as the recent 17.5% one-year performance shows versus VTI's 14%.

Top 10 Holdings

QQ's top five holdings pack more punch - NVIDIA leads at 8.6% of assets, followed by Apple's 7% and Microsoft's 6.4%. These three tech giants alone make up over 22% of the entire fund. The concentration shows in Amazon and Tesla too, claiming 4.8% and 3.8% respectively. That's nearly 31% of your money riding on just five companies.

VTI spreads the risk thinner. NVIDIA still tops the list but at a more modest 6.6%, while Apple and Microsoft each sit below 6%. The fund's total market approach means Alphabet sneaks into the fifth slot at 2.8%, replacing Tesla entirely. These five positions represent about 24% of the portfolio - significant, but giving you breathing room if any single stock stumbles.

Valuation & Growth Metrics

QQQ trades at a clear premium with a P/E of 25.1 versus VTI's 21.5, and the gap widens further on price-to-book: 6.4 times book value for QQQ compared with 4.1 for VTI. Those extra valuation multiples are buying you faster historical earnings growth 15.8% a year for the Nasdaq-heavy portfolio versus 8.7% for the broad market so investors are essentially paying three extra turns of earnings for roughly double the growth rate.

The sales numbers tell a messier story. QQQ's holdings have expanded revenue at 8.3% annually, while VTI's aggregate sales growth shows a 39% decline, dragged down by its large weighting in slower-growth sectors outside tech. Long-term earnings projections barely differ 10.8% for QQQ, 10.6% for VTI so today's valuation gap hinges on whether you think the past decade's growth edge will persist or revert.

Which ETF Fits Your Portfolio?

QQQ makes sense if you want to bet on the tech-heavy Nasdaq-100 and don't mind paying 0.20% a year for the privilege. The 17.5% one-year gain looks tempting, but you're getting a portfolio that parks half its money in technology and trades at 25-times earnings. That's a concentrated ride, fine when growth is in favor, less fun when it isn't.

VTI gives you the whole U.S. market for just 0.03%, a fee so low it's almost free, and the 1.12% yield is more than double QQQ's payout. The trade-off is a tamer 14% recent return and a 33% tech weighting that feels modest only by comparison. If you want one fund you can forget about for decades, VTI is the obvious candidate; if you crave extra tech exposure and accept the swings, QQQ can play a satellite role.

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.