QQQ vs VUG: Side-by-Side ETF Comparison

QQQ vs VUG: QQQ's tech-heavy Nasdaq-100 focus delivered 17.5% last year versus VUG's broader growth index at 14%, but you'll pay 0.20% in fees versus VUG's rock-bottom 0.04%. The choice comes down to whether you want concentrated Nasdaq exposure or diversified growth stocks - both hold similar tech weightings around 51-52%.

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 runs QQQ as a tracking vehicle for the NASDAQ-100, which means you’re buying the 100 largest non-financial stocks listed on that exchange; the portfolio is re-balanced whenever the index changes, and the result is a tech-heavy basket that currently parks 51.3 % of assets in technology names and charges 0.20 % a year. Vanguard’s VUG follows the CRSP U.S. Large Cap Growth Index instead, a broader benchmark that still leans toward fast-growing companies but pulls from the entire NYSE and NASDAQ universe; the sector mix ends up almost identical (52.5 % tech) yet the fee is barely four basis points, one-fifth the cost of QQQ.

The issuer difference shows up in how each fund is run. Invesco uses a unit-investment trust structure that can’t lend shares or reinvest dividends, so cash sits idle and the tracking error can widen; Vanguard uses a plain-vanilla open-end fund that can lend securities and sweep every penny back into the index, which partly explains why VUG’s 0.41 % yield is only five basis points below QQQ’s despite the lower fee. For investors, the trade-off is simple: QQQ gives you the pure NASDAQ-100 experience with a slightly higher price tag, while VUG delivers a similar growth tilt for almost nothing and wraps it in Vanguard’s patented share-class efficiency.

Annual & Cumulative Returns

QQQ has consistently outperformed VUG across every major time period, with the gap widening the longer you stretch the timeline. The three-year stretch shows the narrowest margin at just 1.36 percentage points, but that difference balloons to 2.37 points over a decade. This year's numbers tell a stark story: QQQ sits 2.26 points ahead while VUG remains underwater, suggesting the Nasdaq-100's tech-heavy composition has better weathered 2024's market crosswinds.

The performance edge comes at a cost - literally. QQQ charges five times more in fees at 0.20% versus VUG's razor-thin 0.04% expense ratio. Whether that premium is worth paying depends on your conviction that tech megacaps will keep delivering. VUG offers nearly identical sector exposure (52.5% tech vs QQQ's 51.3%) but casts a wider net beyond the Nasdaq exchange, which could provide some cushion if tech dominance fades. For investors comfortable paying extra for historical outperformance, QQQ's track record speaks loudly. Those prioritizing costs and broader diversification might find VUG's steady-if-slightly-lower returns perfectly acceptable.

Risk Metrics

QQQ and VUG walk almost the same risk tightrope. Over the past three years, QQQ’s annualized volatility has been 15.56%, a hair below VUG’s 15.64%, and the one-year numbers show the same pattern QQQ 15.64%, VUG 16.02%. In plain terms, you would have lost or gained about 15-16 cents on every dollar in either fund on a typical day. The Sharpe ratio tells the same story: QQQ edges out 1.61 versus 1.59, meaning each unit of volatility has delivered fractionally more excess return, but the gap is small enough that a single rough quarter could flip the ranking.

For anyone choosing between the two, this similarity is the takeaway. Both ETFs are dominated by the same mega-cap growth names Apple, Microsoft, Nvidia so they rise and fall on the same headlines. QQQ’s slightly lower volatility and marginally higher Sharpe ratio don’t create a different risk profile; they’re more like rounding errors. Pick one or the other based on cost, tracking preference, or portfolio fit, not because one promises a smoother ride.

Dividend Yield & Growth

QQQ's 0.46% yield edges out VUG's 0.41%, though both are practically rounding errors for growth-focused portfolios. The five-hundredths of a percentage point difference translates to just $5 extra per year on a $10,000 investment. What matters more is that neither ETF prioritizes dividend income - these yields exist because the underlying companies occasionally distribute cash, not because the funds seek dividend-paying stocks.

The quarterly payments from QQQ provide slightly more regular cash flow than VUG's distribution schedule (which varies), but this barely registers for most investors. Both funds pay so little that you'd need substantial positions for the dividend frequency to matter for budgeting purposes. If you're investing for growth, treat these dividends as incidental - they're simply what happens when Apple or Microsoft decides to share some profits, not a source of meaningful income.

Fees & Liquidity

QQQ charges 0.20% a year, five times the 0.04% VUG levies. Put real money on it: every $10,000 held means $20 goes to Invesco versus $4 to Vanguard. That 16-basis-point gap sounds small, but on a $100,000 position held for ten years the difference is roughly $1,600, assuming both trackers match their indexes. If you trade frequently the spread narrows a bit, yet buy-and-hold investors keep paying the freight every single year.

Both ETFs trade millions of shares daily, so bid-ask spreads sit tight usually a penny or two. QQQ’s longer track record and retail name recognition give it a slight edge in depth, yet VUG’s flow is more than ample for anything short of multi-million-dollar blocks. In short, VUG is the cheaper taxi to large-cap growth; QQQ costs more but delivers the Nasdaq-100’s tech-heavy ride.

ETF Composition: Asset Classes

QQQ and VUG both plant nearly their entire portfolio in U.S. large-cap growth names, but QQQ leaves a 3.6% sliver overseas while VUG keeps 99.6% at home. That modest foreign sleeve in QQQ comes from the Nasdaq-100’s habit of including a handful of non-U.S. listings mostly dual-listed tech giants whereas VUG’s CRSP benchmark is stricter about domestic incorporation. Practically, this means QQQ investors get a whisper of currency exposure and a touch more diversification, while VUG offers a purer play on American balance sheets.

The cash stakes are microscopic for both under 0.2% so neither fund is dragging idle dollars. What matters more is how that geographic tilt interacts with the sector bets already shown: QQQ’s 3.6% non-U.S. share sits mainly in the same tech-heavy names that drive its 51% sector weight, amplifying the single-theme risk. VUG’s 0.2% overseas slice is too small to move the dial, leaving the portfolio’s risk profile driven almost entirely by its 52% tech allocation and the slightly richer 29.7 P/E that comes with it.

Regional Allocation

QQQ's geographic footprint shows a distinct tilt toward U.S. companies, with 97.6% of holdings based in North America. That remaining 2.4% exposure to international markets might seem minor, but it's notably absent from VUG, which maintains a pure 100% domestic allocation. The NASDAQ-100's composition naturally pulls in a handful of foreign companies, particularly from Europe and emerging markets, while VUG's broader large-cap growth index sticks strictly to American firms.

For investors, this difference means QQQ offers a touch of international diversification within a U.S.-focused fund, though the impact on returns will likely be minimal given the small percentages involved. The 0.58% allocation to Latin America and emerging Asia in QQQ could provide a slight hedge against dollar strength, but don't expect meaningful geographic balance - both funds remain overwhelmingly tied to the U.S. economy and market cycles. If you want pure American growth exposure without any foreign influence, VUG delivers that. If you don't mind a sliver of international names mixed in with your tech giants, QQQ's composition won't materially change your risk profile.

Sector Weights

Both funds lean hard into tech, but QQQ's Nasdaq-100 pedigree leaves it with almost no exposure to financial-services names (0.3%) and only a token weight in real estate (0.1%). VUG, tracking the broader CRSP U.S. Large Cap Growth Index, carries a still-modest 5.4% in banks and insurers plus a 1.1% real-estate slice, enough to matter if rates shift. The difference shows up in healthcare as well: VUG's 5.6% beats QQQ's 5.0%, while QQQ compensates with a larger 7.8% stake in consumer-defensive stocks such as Costco and Pepsi, a sector VUG barely owns at 1.3%.

Energy and materials are rounding errors in either portfolio, yet even here QQQ is the more concentrated bet. Its combined 1.6% in energy and basic materials edges above VUG's 1.0%, and QQQ's 3.3% industrials weight is about a percentage point lighter than VUG's 3.8%. For investors, the takeaway is simple: VUG offers a slightly wider runway across growth-oriented sectors, while QQQ doubles down on the Nasdaq's brand-name tech giants and the consumer staples that happen to trade there.

Top 10 Holdings

Both ETFs concentrate heavily in the same three tech giants, but VUG pushes its bets further. NVIDIA tops both lists, yet commands 12.7% of VUG's assets versus 8.6% in QQQ. The same pattern shows up the line: Apple and Microsoft each eat up about two percentage points more of VUG's portfolio. Add it together and the top three names represent 35.2% of VUG's money, compared with 22.1% for QQQ. That's a meaningful gap if any of these stocks hit a rough patch.

Tesla sneaks into QQQ's top five at 3.8%, while VUG swaps in Alphabet's A-shares at 5.4%. The result is QQQ's fifth-largest position carries a smaller weight than VUG's fifth, even though QQQ holds fewer names overall. For investors, this means VUG offers slightly more concentrated exposure to mega-cap growth, while QQQ spreads the risk a bit wider across its universe. Neither approach is inherently better - it just depends how much single-stock risk you're comfortable carrying.

Valuation & Growth Metrics

QQQ trades at a noticeably lower multiple across every valuation metric. The Nasdaq-100 proxy’s 25.1 P/E and 6.4 price-to-book sit about 15% and 33% below VUG’s corresponding 29.7 and 9.6 readings. Even on sales, investors pay roughly two-thirds as much for each dollar of QQQ revenue. That discount isn’t because the portfolio is stuffed with slow growers; long-term earnings growth is only a point and a half lower (10.8% vs 12.2%), and the tech-heavy basket has still compounded earnings at nearly 16% a year.

VUG’s loftier price tag buys faster historical expansion 24% annual earnings and 12.5% sales growth versus QQQ’s 15.8% and 8.3%. Whether that extra speed justifies the richer valuation hinges on how reliably those higher growth rates persist. Patient bulls who believe large-cap growth can keep sprinting may stomach VUG’s premium, while buyers who’d rather pay less for slightly tamer expansion might find QQQ the quieter bet.

Which ETF Fits Your Portfolio?

QQQ's 17.5% one-year return beat VUG by 3.5 percentage points, but that extra performance comes at a price - literally. You'll pay 0.20% annually versus VUG's rock-bottom 0.04% fee, which means QQQ costs five times more to own. For a $10,000 investment, that's $16 more per year, or $160 over a decade. Whether that premium is worth it depends on whether you believe the NASDAQ-100's tech-heavy concentration can keep delivering superior returns.

The choice really comes down to what you want from your growth allocation. QQQ gives you pure tech exposure with Apple, Microsoft, and Nvidia dominating the portfolio, while VUG spreads its bets across 275 large growth stocks including healthcare and consumer names. Both ETFs hold similar tech weightings around 52%, but VUG's broader diversification might cushion the blow when growth stocks hit a rough patch. If you're comfortable paying more for concentrated tech exposure and potentially higher volatility, QQQ fits. If you prefer a wider growth net with lower costs, VUG makes more sense.

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.