SPY vs QQQ: Side-by-Side ETF Comparison

SPY vs QQQ boils down to diversification vs tech concentration - SPY spreads you across 500 stocks with lower fees (0.10%) and a 1.07% yield, while QQQ's NASDAQ-100 focus delivered stronger 1-year returns (17.5% vs 14.4%) but costs twice as much at 0.20% with half the dividend income. The choice depends on whether you want broad market exposure or are comfortable with 51% tech weighting and higher valuation risk.

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

SPY comes from State Street's SPDR family and tracks the S&P 500 - that's every large U.S. company from Apple to Zoetis, giving you the whole market in one package. The fund spreads your money across 500 stocks, with tech making up about a third (34%), but you'll also own banks, oil companies, and consumer brands that balance things out when one sector stumbles.

QQQ is Invesco's play on the NASDAQ-100, which skips financials entirely and loads up heavily on growth names. More than half the fund sits in technology stocks (51%), with another 16% in communication services - think Google, Meta, and Netflix. This concentration means QQQ rides higher when tech rallies, though it also takes a bigger hit when growth stocks sell off. The fund's 0.20% expense ratio costs double SPY's 0.10%, but investors have been willing to pay up for that growth tilt.

Annual & Cumulative Returns

QQQ has consistently outpaced SPY across every time horizon shown, but the margin widens dramatically the longer you stay invested. Over the past year, the gap was a modest 3.14 percentage points, yet stretch back ten years and QQQ's 20.51% annualized return leaves SPY's 15.63% in the dust. That 4.88 percentage-point annual edge compounds into serious money; $10,000 planted a decade ago would sit at roughly $64,400 in QQQ versus $42,700 in SPY today.

The catch is the ride you'd have endured. QQQ's tech-heavy portfolio (51% versus SPY's 34%) delivered the outperformance but also carried a loftier valuation: 25.1 times earnings against SPY's 22.3. When markets sneeze, growth stocks catch colds first, so expect deeper pullbacks in exchange for those higher long-term gains. If your stomach handles volatility and your timeline stretches years, QQQ's numbers speak loudly. Prefer a smoother path with still-respectable returns? SPY's broader, value-leaning mix has you covered.

Risk Metrics

QQQ's 15.6% three-year volatility sits roughly four percentage points above SPY's 12%, a gap that has persisted for the past year. That extra bump reflects the fund's 51% weighting in technology names - when growth stocks sneeze, QQQ catches cold. The higher P/E of 25 also signals you're paying for more earnings risk than SPY's 22 multiple.

Yet QQQ has still delivered better risk-adjusted returns, posting a Sharpe ratio of 1.61 versus SPY's 1.39 over three years. In plain terms, investors have been compensated for the additional volatility through stronger performance per unit of risk taken. If you can stomach swings that run about one-third higher than the broad market, QQQ's growth tilt might suit you. Prefer to sleep better during sell-offs? SPY's diversification offers a smoother ride at the cost of some upside.

Dividend Yield & Growth

SPY's 1.07% yield is more than double QQQ's 0.46%, which makes sense when you look under the hood. The S&P 500 includes mature banks, utilities, and consumer giants that actually pay dividends, while QQQ's tech-heavy lineup - think Apple, Microsoft, Nvidia - prefers buybacks over payouts. Both send checks every quarter, but SPY investors pocket about $107 annually per $10,000 invested versus just $46 for QQQ holders.

Neither yield will knock your socks off, and that's the trade-off. QQQ's lower yield reflects companies reinvesting profits for growth - its 17.5% one-year return beat SPY's 14.36% handily. If you're building a retirement stream, SPY's steadier dividend matters more. If you're 20 years from needing the money, that extra percentage point of yield probably won't move the needle compared to QQQ's growth potential.

Fees & Liquidity

SPY's 0.095% expense ratio gives it a clear cost advantage over QQQ's 0.20% fee. On a $10,000 investment, that's $9.50 annually versus $20 - not huge, but the gap doubles QQQ's price tag. The difference compounds over time, especially since SPY tracks the broader S&P 500 while QQQ focuses on growth-oriented NASDAQ-100 stocks.

Trading costs favor SPY too. As the world's largest ETF with decades of history, it offers tighter bid-ask spreads and deeper liquidity than QQQ. You'll typically lose less money to market makers when buying or selling SPY, particularly during volatile periods when QQQ's tech-heavy portfolio can see wider spreads. For frequent traders or those dollar-cost averaging, these friction costs add up faster than the expense ratio difference.

ETF Composition: Asset Classes

SPY's portfolio is almost entirely US stocks at 99.1%, with barely a sliver allocated elsewhere. This makes sense - it's designed to track the S&P 500, which is the definitive US large-cap index. The 0.5% international exposure and 0.3% cash position are minimal and likely just operational buffers rather than intentional diversification.

QQQ takes a slightly different approach, holding 96.3% US stocks while allocating 3.6% to international equities. This modest international tilt reflects the NASDAQ-100's inclusion of some foreign companies with US listings, plus the fund's 0.07% cash position is even leaner than SPY's. For investors, this means QQQ offers marginally more global exposure, though both funds remain overwhelmingly focused on American companies.

Regional Allocation

SPY keeps things almost entirely stateside, with 99.5% of its revenue coming from North America. The tiny slivers elsewhere 0.38% in developed Europe, 0.12% in emerging Asia are little more than rounding errors that show up when an S&P 500 company books sales through a foreign subsidiary. In practice, you're buying a U.S. economic bet with only trace international seasoning.

QQQ’s footprint is only slightly wider, but the gap is visible: 97.6% North America, 1.2% developed Europe and 0.38% emerging Asia, plus a 0.6% toehold in Latin America. That extra two-percentage-point exposure comes from the Nasdaq-100’s heavier tilt toward megacaps Apple, Microsoft, Nvidia that sell iPhones, cloud services and data-center chips everywhere from Berlin to Bangalore. If the dollar weakens or overseas consumers keep spending, QQQ should feel it first, while SPY investors will need a stronger domestic economy to move the needle.

Sector Weights

QQQ's 51% technology weighting makes it look like a sector fund wearing a market index costume, while SPY's 34% tech allocation feels more balanced even though that's still hefty. The difference becomes stark when you scan the rest of the lineup: QQQ barely touches financials at 0.3% and energy at 0.5%, effectively betting that banks and oil don't matter much. SPY spreads its bets wider - 12.7% in financial services, 3% in energy, and meaningful chunks across industrials and healthcare that QQQ mostly ignores.

This concentration shows up in performance patterns. When tech rallies, QQQ's extra 17 percentage points in the sector amplify gains. When tech stumbles, there's nowhere to hide. SPY's broader sector mix - including those forgotten areas like utilities and real estate - means it won't shoot the lights out during tech booms, but it won't crater when sentiment shifts either. The choice comes down to conviction: if you believe tech dominance will continue, QQQ's laser focus delivers that exposure. If you're not sure which sectors will lead next year, SPY's diversification across the economy offers more balance.

Top 10 Holdings

Both ETFs tilt heavily toward the same three mega-caps, but QQQ pushes the concentration further: NVIDIA, Apple and Microsoft together chew up 22.1% of QQQ’s assets versus 19.5% in SPY. That extra weighting shows up in the fourth and fifth slots as well Amazon is a full percentage point larger in QQQ (4.81%) and Tesla squeezes into the lineup at 3.82%, a name that doesn’t even crack SPY’s top five. In short, QQQ’s bet on the Nasdaq-100 amplifies the same growth giants you already own in SPY, just with bigger spoonfuls.

What this means day-to-day is that when the market’s mood swings toward big tech, QQQ will feel it first and harder; when sentiment cools, the same stocks drag it lower faster. SPY’s 1.5% tilt away from tech (34% vs 51%) and its inclusion of banks, energy and healthcare in the top ranks spreads the risk around. If you already hold individual tech names, SPY gives you overlap without the overload; QQQ doubles down on the sector you probably own elsewhere.

Valuation & Growth Metrics

QQQ trades at a 25.1 multiple, about 2.8 points richer than SPY's 22.3, and the gap widens when you look at book value: QQQ fetches 6.4 times book while SPY sits at 4.5. Price-to-sales tells the same story - 5.0 versus 3.1 - so every dollar of revenue in the Nasdaq-100 costs you roughly 60% more than a dollar of S&P 500 sales. You're paying up for a portfolio that's more than half tech; SPY keeps technology at a still-hefty but lower 34%.

The extra premium buys faster growth, just not quite as much as the price gap suggests. Historical earnings for QQQ have compounded at 15.8% a year, comfortably ahead of SPY's 10.3%, and forward-looking estimates show the same 40-basis-point edge they carry in sales growth. Whether that differential is enough to justify the higher entry ticket depends on how tolerant you are of the occasional tech-driven drawdown - the Nasdaq-100 has never been shy about volatility.

Which ETF Fits Your Portfolio?

SPY gives you the whole market in one package - every sector, every size company, all for 0.10% annually. That tiny fee buys you 1.07% in dividends and exposure to 500 companies, though tech still dominates at 34% of holdings. The 14.36% one-year return reflects this broad diversification, which smooths out the wild swings you see in concentrated funds.

QQQ takes the opposite approach, betting heavily on tech giants with 51% of assets in technology alone. You'll pay twice SPY's fee at 0.20% and collect half the dividend yield at 0.46%, but the 17.5% one-year return shows what happens when big tech runs. Just know you're buying a pricier basket - the P/E sits at 25 compared to SPY's 22 - so any tech selloff hits harder here. Pick SPY if you want steady market exposure, QQQ if you can stomach tech's volatility for potentially higher returns.

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 SPY and QQQ?

SPY tracks the entire S&P 500, giving you broad exposure to large US companies with 34% in tech, while QQQ follows the Nasdaq-100 and is heavily tech-focused at 51%. QQQ has delivered stronger returns lately, up 17.5% versus SPY's 14.36% over the past year, but comes with higher volatility at 15.64% compared to SPY's 10.98%. You'll pay 0.20% annually for QQQ versus 0.10% for SPY, and QQQ offers less dividend income at 0.46% yield versus SPY's 1.07%.

Which ETF has delivered higher historical returns?

QQQ has delivered higher returns across every time period shown, with its 10-year annualized return of 20.51% significantly outpacing SPY's 15.63%. The gap is even more pronounced over three years, where QQQ's 29.94% return well exceeds SPY's 21.41%. Of course, QQQ's tech-heavy focus comes with higher volatility, so those extra returns weren't free.

Which ETF has the lower expense ratio?

SPY charges 0.10% annually while QQQ costs 0.20%, so SPY is the cheaper option by half. On a $10,000 investment, that's $10 versus $20 per year in fees.

Does QQQ outperform the S&P 500?

QQQ has outperformed SPY recently, with 17.5% vs 14.36% over the past year and 29.94% vs 21.41% over three years. The gap widens over longer periods too, with QQQ delivering 20.51% annually over ten years compared to 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 focus on growth companies that typically reinvest earnings rather than pay them out.

Which ETF is more volatile?

QQQ is clearly the more volatile choice, with 1-year volatility of 15.64% compared to SPY's 10.98%. The gap stays consistent over three years too - QQQ sits at 15.56% while SPY comes in at 11.94%.

That extra volatility makes sense given QQQ's heavy tech concentration. Over half the fund sits in technology stocks versus SPY's more balanced 34% weighting.

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

QQQ is essentially a tech bet with 51.3% in technology compared to SPY's 34.2%. The Nasdaq fund also carries 16.2% in communication services and 13.1% in consumer cyclicals, while SPY spreads its bets more evenly across financial services (12.7%) and other sectors.

Which ETF is better for growth investors?

QQQ has delivered stronger growth with a 20.51% 10-year return versus SPY's 15.63%, but you'll pay for it with higher volatility (15.64% vs 10.98%) and a steeper price tag at 0.20% expenses. The choice depends on your risk tolerance, QQQ's tech-heavy approach offers more upside potential while SPY provides broader diversification across sectors.

Which ETF is better for income investors?

Neither SPY nor QQQ is ideal for income-focused investors. SPY's 1.07% dividend yield beats QQQ's 0.46%, but both are quite low compared to dedicated dividend ETFs. QQQ's tech-heavy portfolio (51% allocation) prioritizes growth companies that typically reinvest rather than distribute profits. Income investors seeking regular cash flow would likely find better options elsewhere.

Can I hold both QQQ and SPY in my portfolio?

Yes, you can hold both QQQ and SPY together. They complement each other well since SPY gives you broader market exposure with 34% in tech and lower volatility at 10.98%, while QQQ focuses heavily on growth stocks with 51% tech allocation and higher volatility at 15.64%. Many investors use this combination to balance growth potential with stability, though you'll get overlap in companies like NVIDIA, Apple, and Microsoft since they appear in both top holdings.