QQQ vs XLK: Side-by-Side ETF Comparison

QQQ vs XLK boils down to diversification versus focus: QQQ spreads your bet across tech (51%), communications and consumer names for 0.20%, while XLK goes almost all-in on tech at 98.8% and charges just 0.09%. That concentration paid off recently XLK outpaced QQQ 20.7% to 17.5% over the past year but also means you’re getting a pure-play tech toy instead of the broader Nasdaq-100 basket.

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

QQQ comes from Invesco and tracks the NASDAQ-100, which means you're buying the 100 largest non-financial companies listed on that exchange. The portfolio stretches beyond tech into communication services (16.2%) and consumer cyclicals (13.1%), though technology still dominates at 51.3%. State Street's XLK takes a purer approach - it owns the technology sector stocks from the S&P 500 and almost nothing else, with 98.8% parked in technology companies.

This difference shows up in costs and recent performance. XLK charges 0.09% annually versus QQQ's 0.20%, yet XLK returned 20.74% over the past year while QQQ gained 17.50%. The concentration trade-off is real: XLK gives you almost pure tech exposure with lower fees, but QQQ's broader NASDAQ-100 mix includes names like Costco and Starbucks that can cushion the blow when technology stumbles.

Annual & Cumulative Returns

XLK has consistently outperformed QQQ over every meaningful timeframe, though the margin varies. The tech-focused XLK delivered 20.74% over the past year compared to QQQ's 17.5%, and this advantage stretches to 23.18% versus 20.51% over the past decade. The narrowest gap appears in the three-year window where XLK's 30.2% barely edges out QQQ's 29.94%, suggesting both funds benefited similarly from the post-2020 tech surge.

The performance differential reflects each fund's composition. QQQ's 51% tech allocation means it captures much of the sector's upside while its 29% exposure to communications and consumer names provides some cushion during tech selloffs. XLK's near-pure tech concentration (98.8%) delivers stronger returns when the sector rallies but likely amplifies downside moves. For investors, this trade-off means XLK offers more targeted tech exposure with higher return potential, while QQQ provides a slightly more balanced play on growth stocks that happen to be dominated by tech.

Risk Metrics

QQQ has been the steadier ride, with 15.6% annual volatility over both the past one- and three-year windows, while XLK's focused tech bet has pushed its swings to nearly 20% on a one-year basis and 18% over three years. That extra bumpiness is the trade-off for XLK's 20.7% trailing return versus QQQ's 17.5%, and it shows up directly in the Sharpe ratio: QQQ's 1.61 edges out XLK's 1.42, meaning investors collected a touch more reward per unit of risk with the broader Nasdaq tracker.

The numbers suggest QQQ's 51% tech weighting is enough to capture most of the sector's upside while the sprinkling of consumer and communication names smooths the drawdowns. XLK's 99% tech concentration amplifies both directions, so when the group sells off there's little else inside the fund to cushion the fall. Risk-tolerant investors who want pure-play exposure may not mind the higher volatility, but anyone sizing position limits or pairing with other growth assets might find QQQ's slightly calmer profile easier to hold through the next sector rotation.

Dividend Yield & Growth

QQQ pays a modest 0.46% while XLK offers a slightly richer 0.54%, a difference that adds up to about $8 more per year on every $10,000 invested. Both yields are still low by historical standards, and neither ETF is built for income hunters; the payouts are more of a quarterly bookkeeping entry than a cash-flow strategy. XLK’s edge comes from its purer tech exposure, where a handful of mature giants like Apple and Microsoft generate enough free cash to keep dividends ticking higher, whereas QQQ’s 16% weighting in non-tech names dilutes the pot.

Timing matters too: QQQ distributes every three months, giving investors a predictable rhythm, while XLK’s schedule isn’t standardized, so the cash can land unevenly. If you’re reinvesting, the gap is minor, but anyone budgeting around dividend checks will notice. In short, pick XLK for the extra 0.08% and accept the sporadic dates, or stay with QQQ for calendar certainty and accept the slightly slimmer pickings.

Fees & Liquidity

XLK costs less than half of QQQ: 0.09% versus 0.20% a year. On a $50,000 holding that’s $45 against $100 in annual fees, a gap that compounds quietly in the background. Both ETFs trade millions of shares daily, so bid-ask spreads are normally a penny wide; the real cost difference is that expense line, and it favors XLK every quarter.

The fee gap flips when you look at what you own. QQQ’s 0.20% buys a broader basket roughly half tech, plus consumer and communication names while XLK’s 0.09% is a near-pure bet on technology. If you want tech and only tech, XLK is the cheaper route. If you want the growth-heavy NASDAQ mix without trying to slice sectors yourself, QQQ’s extra 0.11% can be viewed as a convenience charge for the wider allocation.

ETF Composition: Asset Classes

QQQ spreads its bets across nearly all domestic stocks with 96.3% in U.S. companies and a thin 3.6% slice abroad, while XLK pushes the home-country dial even further to 98.8%. Both funds keep cash parked at a negligible 0.07%, so your money is working, not sitting. The takeaway: either choice gives you almost-pure U.S. equity exposure, but QQQ’s slightly wider foreign footprint can add a touch of currency-driven volatility if overseas tech suppliers or customers move.

For investors, the real difference isn’t geography it’s concentration risk. XLK’s 98.8% technology weighting means you’re buying a single-sector sledgehammer, whereas QQQ’s 51% tech allocation still leaves room for communication services and consumer cyclicals to soften the blow when semiconductors sneeze. If you want the market’s tech leaders without betting the farm on one aisle of the economy, QQQ’s broader sector mix offers a cushion; if you’re comfortable with a pure-play bet, XLK’s razor-sharp focus delivers exactly what it promises.

Regional Allocation

Both QQQ and XLK run almost completely out of the United States, but the Nasdaq-100 tracker keeps a small passport. Only 2.4% of QQQ’s assets sit outside North America, yet that sliver is spread across four regions: Latin America gets the largest slice at 0.58%, followed by developed Europe at 1.23%, emerging Asia at 0.38%, and even a trace of U.K. exposure at 0.22%. XLK, by contrast, keeps it simpler: 98.9% stays in North America and the remaining 1.1% is split almost evenly between developed Europe and emerging Asia. In dollar terms, a $10,000 position in QQQ leaves roughly $240 abroad, while the same stake in XLK exposes you to only $110 of non-U.S. revenue.

For investors who treat geographic diversification as a risk dial, the difference is modest but real. QQQ’s foreign weight is still tiny, yet it is more than double XLK’s, and the Latin America pocket could add a touch of commodity-currency sensitivity. XLK’s near-pure U.S. focus means you are essentially betting on Silicon Valley, Seattle, and Austin with almost no currency or overseas-earnings noise. Neither fund offers meaningful insulation if the dollar surges, but QQQ gives you a whisper of global reach while XLK keeps the microscope firmly on domestic tech giants.

Sector Weights

QQQ spreads its bets across the market while XLK puts almost everything on tech. With 51% in technology, QQQ still leaves room for 16% in communication services and 13% in consumer cyclicals, plus small slices of healthcare, industrials, and consumer staples. XLK takes a different approach - nearly 99% technology stocks means you're essentially buying the sector pure-play, with just 1.2% in communication services rounding out the fund.

This concentration difference matters when tech hits rough patches. QQQ's diversification across non-tech sectors provides some cushion during sector rotations, though it also dilutes tech's upside. XLK gives you the full force of technology moves, both positive and negative. The choice comes down to conviction - if you believe tech will continue outperforming, XLK's laser focus delivers that exposure without dilution. If you prefer a growth tilt with some downside protection, QQQ's broader mix might suit you better.

Top 10 Holdings

QQQ spreads its bets across the Nasdaq-100’s heavy hitters, so its top five names add up to about 30% of the portfolio. NVIDIA still leads at 8.6%, yet that position is almost half the size it occupies in XLK, where the same chip stock commands nearly 15%. Apple and Microsoft sit right behind, each grabbing 7% and 6% respectively, giving the fund a familiar Big-Tech spine while leaving room for Amazon and Tesla to sneak in at 4.8% and 3.8%. Those consumer-facing names simply don’t qualify for a tech-only index, so they drop out of XLK and the weights of the remaining hardware and software giants automatically inflate.

The concentration gap shows up quickly: XLK’s top three holdings swallow almost 40% of the fund, making the portfolio noticeably more sensitive to any earnings wobble from NVIDIA, Apple, or Microsoft. QQQ’s broader mix softens that single-stock risk, but it also waters down the upside when pure-play tech rallies. If you want a tighter bet on semiconductor cycles, cloud spend, and AI infrastructure, XLK’s heftier slices deliver it. Investors looking for a smoother ride across the growth universe tech plus a side of online retail and EV buzz will find QQQ’s lighter, more diversified loading easier to hold through the next rotation.

Valuation & Growth Metrics

QQQ trades at 25.1 times earnings, about half a point cheaper than XLK’s 25.7, yet the pure-tech fund carries the loftier price tag on every other metric: price-to-book is 8.3 vs 6.4 and price-to-sales is 7.1 vs 5.0. In short, you’re paying a richer premium for XLK’s concentrated tech exposure, while QQQ’s dose of consumer and communication names keeps its balance-sheet multiples a little closer to earth.

Growth expectations flip the script. Forward-looking earnings growth for XLK is 14.7 % a year, almost four points ahead of QQQ’s 10.8 %, which helps justify the higher valuation. The trade-off is that QQQ has delivered faster historical earnings (15.8 % vs 14.2 %) and stronger sales expansion (8.3 % vs 6.2 %), thanks to its broader mix. If you want the market’s best-tech-only growth projections, XLK offers them at a steeper price; if you prefer a slightly cheaper entry with a longer record of broad-based growth, QQQ fits the bill.

Which ETF Fits Your Portfolio?

If you want pure tech exposure, XLK gives it to you straight: 98.8% technology stocks and a 20.74% one-year return that beat QQQ’s 17.5% while charging only 0.09% in fees. That’s the lowest-cost, highest-beta way to ride the sector, but it also means you’re glued to every swing of a single industry.

QQQ spreads the risk across tech (51.3%), plus sizable slices of communication services and consumer cyclicals, so when one group stumbles the others can soften the fall. You pay 0.20% for that cushion more than double XLK’s price and accept a slightly lower recent return, yet you gain a Nasdaq-100 basket that has historically bounced back faster after tech corrections. Pick XLK if you can stomach a one-sector roller-coaster; choose QQQ if you’d rather keep most of the tech punch while leaving the door open to other growth engines.

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.