We Compare VOOG vs QQQ: Vanguard S&P 500 Growth ETF (VOOG) vs Invesco QQQ Trust (QQQ).
These are two popular growth Exchange Traded Funds (ETFs).
This article will help you decide between VOOG and QQQ.
VOOG vs QQQ
The main difference between VOOG and QQQ is the company that offers the exchange-traded fund (ETF). Vanguard offers VOOG while Invesco offers QQQ.
Another significant difference is the expense ratio. VOOG has an expense ratio of 0.10%. QQQ has an expense ratio of 0.2%. That is double the cost!
- Tracks the Standard & Poor’s 500 Growth Index
- It has an expense ratio of 0.1%
- Offered by Vanguard
- Holds 242 stocks
- Similar to VUG
- Tracks the performance of the Nasdaq-100 Index
- It has an expense ratio of 0.2%
- Offered by Invesco
- Holds 100 stocks
VOOG vs QQQ Performance
VOOG and QQQ have performed similarly over the last 10 years, with QQQ beating VOOG by 2.73% annually. However, over the last year, VOOG is beating QQQ -30.64% to -34.19%.
As you can see from the chart, VOOG and QQQ have similar returns.
Similarities between VOOG and QQQ:
- Exchange-Traded Funds (ETFs)
- Similar Performance Over The Long-Term
- Focused On Growth Companies
- Amount Of Holdings
VOOG and QQQ Differences
The primary difference between VOOG and QQQ is that VOOG is a Vanguard fund, while Invesco offers QQQ. QQQ is also twice as expensive, with an expense ratio of 0.20% compared to 0.10% for VOOG.
Differences between VOOG and QQQ:
- Different Number Of Holdings (~242 vs ~100)
- Company That Offers The Fund (Vanguard vs. Invesco)
- Expense Ratio (0.1% vs. 0.2%)
- Fund Inception: 2010
- Expense Ratio: 0.10%
- Number Of Stocks: 242
- Top 10 Holdings: 57.1%
- Similar to VUG
Vanguard S&P 500 Growth ETF (VOOG) is an ETF focused on growth companies. The price-to-earnings (P/E) ratio for VOOG is 34.2x which is high.
That is expected with a growth index. The fund has $169 billion in total net assets.
VOOG was created in 2010 and currently has an expense ratio of 0.10%. This is half the cost of QQQ, which has an expense ratio of 0.20%.
Here is what a 0.10% fee (difference between VOOG and QQQ) will cost over 30 years.
Assuming you start with an initial investment of $100,000 and contribute $10,000 each year over 30 years. You will have roughly ~$82,000 less in your account.
This does not include costs to buy and sell your shares.
Vanguard's VOOG has outperformed the S&P 500 over the last 10 years:
VOOG (Blue) S&P 500 (Yellow)
VOOG Top Holdings
Vanguard VOOG's top 10 holdings include Microsoft, Apple, Google, Amazon, and Tesla. The ETF also provides exposure to over 200 stocks.
However, with the top 10 holdings making up close to 50% of the portfolio, it isn't very diversified compared to other ETFs such as Vanguard Total Stock Market Index Fund ETF (VTI).
How To Invest In VOOG and QQQ
There are two easy ways to invest in VOOG or QQQ commission-free.
- Vanguard to invest in VOOG
- M1 Finance to invest in either VOOG or QQQ. (Use this link for $50 when you open a new account)
Both of these options are free. This is important because fees can lower our returns, as we saw in our earlier example.
M1 Finance is the best option because it allows you to purchase VOOG, QQQ, and thousands of other stocks. M1 Finance also lets you purchase fractional shares. This is great for QQQ and VOOG due to their high prices per share (~$360/Share and $401/share, respectively).
I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.
Personal Capital's free tools allow you to easily find which of your investments has high fees so you can switch them to low-cost options. (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)
- Fund Inception: 1999
- Expense Ratio: 0.2%
- Number Of Stocks: ~100
- Top 10 Holdings: 55.70%
The Invesco QQQ Trust (QQQ) was created in 1999 and has an expense ratio of 0.20%. It provides investors with exposure to a similar portfolio to the Nasdaq 100 index.
The ETF is comprised mostly of technology companies that are high in growth. The price-to-earnings (P/E) ratio for QQQ is 32x, and the fund has $174 billion in net assets.
Over the last 10 years, QQQ has outperformed the S&P 500 with an average return of 16.22% per year. QQQ has performed well over the last 10 years, but there is no guarantee the next 10 years will look the same.
QQQ Top Holdings
Invesco QQQ's top 10 holdings include Apple, Microsoft, Amazon, Tesla, and NVIDIA.
Which is Better VOOG or QQQ?
VOOG and QQQ are very similar investments. VOOG offers a similar asset allocation at a much lower cost of only 0.1%.
As we saw earlier, QQQ beat VOOG by 3% annually. If those returns continue for the next 10 years, it will make the higher cost of QQQ worth it.
However, past performance does not predict future returns. Therefore, VOOG may beat QQQ over the next 10 years with a lower expense ratio. That would be a win-win for VOOG investors!
Is VOOG or QQQ Better for Financial Independence?
VOOG and QQQ can help you reach Financial Independence and Retire Early (FIRE). They both have similar returns on investment. They also have performed great over the last 10 years.
I prefer VOOG because I'm a big fan of Vanguard and its low fees. I would also suggest looking into other funds that give you more diversification, like VTSAX.
My Winner: VOOG
My winner is VOOG, based on its lower expense ratio of 0.10%. I also lean towards Vanguard funds because they will keep their fees low.
Whether you choose VOOG or QQQ, the important part is investing regularly in low-cost funds over the long term. That is the formula for wealth!
If you like ETF comparisons like these, check out more in our related posts below.