VUG vs QQQ: Side-by-Side ETF Comparison

VUG vs QQQ: QQQ outperformed VUG by 3.5 percentage points over the past year (17.5% vs 13.99%) but costs five times more with a 0.20% expense ratio compared to VUG's rock-bottom 0.04%. Both ETFs hold similar tech-heavy portfolios around 52% technology exposure, making the choice largely about whether you prefer Nasdaq-100's concentrated focus or VUG's broader growth approach at a lower cost.

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

Two different issuers, two different approaches to large-cap growth. Vanguard's VUG tracks the CRSP US Large Cap Growth Index, casting a wide net across growth stocks while keeping costs minimal at 0.04%. The fund holds roughly 260 stocks, making it genuinely diversified across large U.S. companies with growth characteristics. Invesco's QQQ takes a different path, tracking the NASDAQ-100 Index with its 100 largest non-financial companies listed on the NASDAQ exchange. This creates a more concentrated portfolio that happens to lean heavily toward technology and innovation-focused firms.

The practical difference shows up in what you actually own. VUG's broader approach means you'll get exposure to growth stocks from across the entire large-cap universe, including companies listed on the NYSE and other exchanges. QQQ's NASDAQ-only focus means you're essentially betting on the tech-heavy ecosystem of one exchange, though it has performed well recently with a 17.5% one-year return versus VUG's 14%. Both ETFs end up with similar sector weights - technology dominates at roughly 52% for VUG and 51% for QQQ - but QQQ's concentration in fewer holdings creates more single-stock risk if any of its top positions stumble.

Annual & Cumulative Returns

QQQ has delivered higher returns across every time period we measured, though the margin varies. The gap is widest over ten years, where QQQ's 20.51% annualized return beats VUG by 2.37 percentage points - a difference that compounds significantly over time. Even during this year's volatility, QQQ managed a positive 1.37% while VUG slipped 0.89%.

The performance gap between these two growth ETFs has remained remarkably consistent, never varying more than 2.5% annually across any period. This suggests both funds capture similar growth trends, with QQQ's concentrated NASDAQ-100 approach providing slightly more upside. For investors choosing between them, the question becomes whether QQQ's higher returns justify its 0.16% higher expense ratio - a trade-off that becomes less significant over longer holding periods, especially in tax-advantaged accounts where the compounding difference matters most.

Risk Metrics

QQQ nudges ahead with slightly lower volatility at 15.64% versus VUG's 16.02% over the past year. Extend the window to three years and the gap narrows to just eight basis points, but the pattern holds. Both funds ride the same growth-wave, yet QQQ's NASDAQ-100 composition feels a touch steadier.

Sharpe ratios echo that steadiness: QQQ's 1.61 edges past VUG's 1.59, meaning investors picked up a whisker more return per unit of risk. The difference is small enough that trading costs or timing could erase it, but it suggests QQQ has delivered its extra 3.5 percentage points of one-year performance without asking shareholders to stomach noticeably wilder swings.

Dividend Yield & Growth

Neither VUG nor QQQ will impress investors who are shopping for yield: VUG’s 0.41% and QQQ’s 0.46% both sit well below the 1.6% you’d get from a plain-vanilla S&P 500 fund, and the five-dollar difference on every $10,000 invested is practically noise. What the numbers do signal is that these portfolios are stuffed with companies that prefer buybacks and reinvestment to mailing out cash exactly what you’d expect when Apple, Microsoft and Nvidia sit at the top of each holdings list.

The one practical wrinkle is timing. Invesco pays QQQ’s modest dividend every quarter, while Vanguard rolls VUG’s payments into an annual December distribution. If you like smoothing out the income calendar or you’re budgeting around quarterly receipts, QQQ wins by default. Otherwise, treat both yields as rounding errors and focus on the growth story; the dividend column is unlikely to sway the final decision.

Fees & Liquidity

VUG's 0.04% expense ratio means you'll pay just 40 cents annually on a $1,000 investment, while QQQ's 0.20% runs five times higher at $2 per thousand. That 16 basis point gap might seem trivial, but it compounds meaningfully over time - on a $50,000 position held for 15 years, the difference adds up to roughly $1,200 in fees alone.

Both ETFs trade millions of shares daily with tight bid-ask spreads, so transaction costs won't meaningfully impact most investors. The real question is whether QQQ's tech-heavy NASDAQ-100 focus justifies its higher price tag compared with VUG's broader growth universe. Neither fund will drain your returns through fee friction, but VUG clearly wins on pure cost efficiency.

ETF Composition: Asset Classes

Both funds keep things simple: VUG parks 99.6% of its money in U.S. equities while QQQ holds 96.3% here at home. That three-percentage-point gap might look trivial, but it means QQQ leaves room for 3.6% in foreign names usually the overseas shares of NASDAQ-listed giants like Taiwan Semiconductor or ASML. VUG’s foreign slice is essentially a rounding error at 0.15%, so investors who want nothing but American growth stocks get a slightly “purer” package.

The cash drag is equally microscopic either way VUG keeps 0.16% on the sidelines, QQQ about half that so your money is working almost all the time. In practice, the difference shows up in breadth, not location: VUG owns roughly 250 large-cap growth names, QQQ just 100 of the biggest NASDAQ stocks. If you like the idea of a wider U.S. growth net with a whisper of international tech, QQQ’s 3.6% foreign stake does the trick. Prefer to stay almost entirely domestic and own the whole growth spectrum? VUG’s 99.6% U.S. weighting tilts you that way without any extra effort.

Regional Allocation

VUG keeps things simple with 100% North American exposure, making it a pure play on U.S. growth stocks. The fund's domestic focus aligns with its goal of tracking large-cap American companies, which explains why you'll find familiar names like Apple and Microsoft dominating its holdings. This concentration means currency risk isn't a factor, but you're also missing out on any international diversification benefits.

QQQ takes a slightly different approach, keeping 97.6% of its assets in North America while sprinkling small amounts across developed Europe, the UK, and emerging markets. The 2.4% international allocation might seem insignificant, but it adds companies like Baidu and MercadoLibre that trade on U.S. exchanges while generating most revenue abroad. This tiny global footprint won't meaningfully impact returns, yet it does give QQQ holders a sliver of geographic diversity that VUG completely avoids.

Sector Weights

Both funds lean heavily on tech stocks, but VUG's 52.5% technology weight edges out QQQ's 51.3%. The real differences show up outside Silicon Valley. QQQ holds nearly 8% in consumer defensive stocks (think Pepsi and Costco) while VUG barely touches the space at 1.3%. VUG also keeps 5.4% in financial services - a sector QQQ largely ignores at just 0.3%. Healthcare exposure splits too: VUG carries 5.6% versus QQQ's 5.0%.

These sector tilts matter more than they might seem. VUG's financial stake means you'll own some banks and payment processors that QQQ skips entirely. Meanwhile, QQQ's consumer defensive allocation provides a cushion during market downturns that VUG simply doesn't have. If you're choosing between them, ask yourself whether you want that extra financial exposure (VUG) or prefer the stability of consumer staples (QQQ). The tech weights are close enough that your decision really hinges on these smaller sector bets.

Top 10 Holdings

VUG leans heavily on its top three positions, with NVIDIA, Apple, and Microsoft soaking up more than 35% of the portfolio. That 12.7% slug of NVIDIA is the single biggest bet either fund makes. QQQ holds the same names, yet caps each one at a mid-single-digit weight; its largest line item is NVIDIA at 8.6%, still three points lighter than VUG’s stake. The result is a smoother cap profile for QQQ, while VUG’s investor gets a purer play on the mega-cap winners.

Below the top trio, the lists diverge. Alphabet’s A shares sit at 5.4% of VUG but don’t crack QQQ’s top five, and Tesla slips into QQQ’s roster at 3.8% while missing from VUG’s headline names. Both funds keep roughly half their assets in tech, so sector risk is similar; the real choice is whether you want the more concentrated, Apple-Microsoft-NVIDIA barbell that VUG offers, or the slightly broader, Nasdaq-100 slice that QQQ delivers.

Valuation & Growth Metrics

VUG trades at a noticeable premium with a 29.7 P/E versus QQQ's 25.1, and the gap widens on price-to-book: 9.6 times book for VUG, 6.4 for QQQ. The same pattern shows up in price-to-sales 7.4 for VUG, 5.0 for QQQ so every dollar of revenue costs you roughly 50% more in the Vanguard fund. What you're paying extra for is faster growth: VUG's long-term earnings growth is clocked at 12.2% a year, a full point above QQQ's 10.8%, and the historical earnings burst of 24% dwarfs QQQ's 16%. Sales growth tells the same story 12.5% to 8.3% so the higher multiples aren't coming from nowhere; they're attached to companies that have been expanding the top and bottom lines more quickly.

Still, QQQ gives you most of that tech-heavy exposure at a lower entry price, and the five-point P/E discount can cushion the blow if sentiment turns. VUG's richer ratios mean it needs to keep beating growth expectations just to stay even, while QQQ has a bit more room for disappointment. Neither valuation looks cheap in absolute terms, so the choice really hinges on whether you think the extra growth VUG promises is worth paying up for, or if you'd rather pocket the valuation cushion and slightly higher dividend that QQQ offers right now.

Which ETF Fits Your Portfolio?

If you're after pure growth with a bargain-basement fee, VUG's 0.04% expense ratio is hard to beat you keep almost every dollar of return. The trade-off is that its 13.99% one-year gain lagged QQQ's 17.5% pop, and the portfolio's 29.7 P/E suggests you're paying a steeper price for each dollar of earnings. QQQ, on the other hand, delivers the punchier recent performance and a slightly higher 0.46% yield, but the 0.20% fee is five times VUG's and the Nasdaq-100 focus leaves you tethered to a narrower bench of names.

Bottom line: buy VUG if low cost and broad large-cap growth exposure are the priority; accept QQQ if you want the Nasdaq's extra octane and don't mind the higher price tag and concentration risk. Either way, both ETFs swim in the same tech-heavy pool together they allocate more than half their assets to technology so don't expect much diversification if you pair them.

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.