VOO Offers Broad Diversification, While QQQ Boasts Tech-Heavy Growth. Which Is Best for Investors?
Key Points
VOO charges a much lower expense ratio and delivers a higher dividend yield than QQQ.
QQQ outperformed VOO over the past year and five years, but with deeper drawdowns and higher volatility.
VOO holds over 500 companies and is less concentrated in technology compared to QQQ’s heavy tech tilt.
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The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) and the Vanguard S&P 500 ETF (NYSEMKT:VOO) differ primarily in cost, dividend yield, and exposure, with QQQ leaning into tech and VOO offering broader diversification at a lower fee.
Both QQQ and VOO are widely traded ETFs that track large-cap U.S. stocks, but QQQ focuses on the NASDAQ-100 while VOO mirrors the S&P 500. Investors comparing these two may weigh QQQ’s tech-heavy, growth-oriented profile against VOO’s broader market coverage and lower ongoing costs.
Snapshot (cost & size)
| Metric | QQQ | VOO |
|---|---|---|
| Issuer | Invesco | Vanguard |
| Expense ratio | 0.20% | 0.03% |
| 1-yr return (as of Nov. 20, 2025) | 16.21% | 10.41% |
| Dividend yield | 0.47% | 1.15% |
| Beta (5Y monthly) | 1.10 | 1.00 |
| AUM | $386 billion | $800 billion |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
VOO offers a much lower expense ratio than QQQ, and it also delivers a higher dividend yield. This can give VOO an edge among fee-conscious investors looking to grow their dividend income.
Performance & risk comparison
| Metric | QQQ | VOO |
|---|---|---|
| Max drawdown (5 y) | -35.12% | -24.53% |
| Growth of $1,000 over 5 years | $2,001 | $1,823 |
What's inside
VOO holds 504 stocks spanning the S&P 500, with a sector mix of 36% technology, 13% financial services, and 11% consumer cyclical. Its largest weights are in Nvidia, Apple and Microsoft, each making up less than 10% of the fund's total assets. The fund's broad diversification may appeal to those seeking exposure across all major U.S. sectors.
QQQ, by contrast, is more concentrated. It contains 101 holdings with a heavier tilt toward technology (64%) and consumer cyclical (18%). Its top three holdings mirror VOO's, but because they make up larger slices of the portfolio, this fund's performance is more sensitive to these giants. Both funds avoid leverage, currency hedges, and other structural quirks.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
VOO and QQQ both focus on large-cap stocks, but they differ in their diversification and long-term goals.
Because VOO tracks the S&P 500, it's set up to earn average returns with greater stability over time. Although it's still relatively heavily weighted toward the tech industry, it offers broad diversification from industry-leading companies across all sectors of the market.
QQQ, on the other hand, is designed to earn above-average returns with a heavier focus on growth companies. Its more significant tilt toward technology increases risk, but it's also resulted in higher one- and five-year total returns.
Its higher expense ratio could be a sticking point for some investors, as it's more than six times higher than VOO's. For those with very large account balances, this can potentially add up to thousands of dollars in fees over time.
The right investment for you will depend on your wealth-building goals. If you're looking for more stability and broader diversification, VOO's access to the S&P 500 makes it a fantastic long-term choice. For those seeking higher-than-average returns and greater exposure to tech stocks, QQQ may be the best option.
Glossary
ETF: Exchange-Traded Fund; a fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Dividend yield: The annual dividends paid by a fund or stock, expressed as a percentage of its price.
NASDAQ-100: An index of 100 of the largest non-financial companies listed on the NASDAQ stock exchange.
S&P 500: A stock market index tracking 500 large U.S. companies across various industries.
Beta: A measure of an investment's volatility relative to the overall market, typically the S&P 500.
AUM: Assets Under Management; the total market value of assets a fund manages for investors.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Sector mix: The breakdown of a fund's investments across different industries or sectors.
Track record: The historical performance and longevity of a fund since its inception.
Leverage: The use of borrowed money to increase potential investment returns, often increasing risk.
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Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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