QQQ vs VOO: What's the Better ETF Buy?

Whether you've spent the past few years invested in the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the Invesco QQQ Trust (NASDAQ: QQQ), you've probably been pretty happy with the results.

The latter has delivered especially impressive returns given its heavy tech overweight, but the S&P 500 hasn't been too far behind. Even though it's supposed to be broadly diversified, the S&P 500 (SNPINDEX: ^GSPC) has roughly 35% of its portfolio dedicated to tech stocks, much of it in the "Magnificent Seven" names. That makes it kind of a tech-lite index.

Regardless of which you'd choose, there's some danger in being so heavily exposed to just a narrow group of stocks. In a comparison between these two ultra-popular funds, deciding exactly how much tech exposure you want in your portfolio will be a major factor.

Image source: Getty Images.

What is in these two ETFs?

We probably don't need to spend a whole lot of time on this since most investors are probably intimately familiar with both. The Vanguard fund targets the S&P 500. The Invesco fund targets the Nasdaq-100.

While the latter is often described as a tech ETF, it isn't (even though it has a significant tilt in that direction). Right now, about 64% of the fund is in tech with another 18% in consumer discretionary, which includes Amazon and Tesla. It's not a pure tech ETF, but it's not far from it.

And that becomes the ultimate factor in deciding between these two funds. Do you want a tech-heavy ETF or something that's a little more broadly spaced out across the entire economy?

Risk and concentration need to be considered

If you just look at historical returns, it's easy to see that the Invesco QQQ Trust has been the clear winner. It's returned an average of 20.8% per year over the past decade compared to a 15.9% average for the Vanguard S&P 500 ETF.

But those numbers alone discount the level of risk taken to achieve that.

Looking at the standard deviation of historical returns over that time frame, the QQQ Trust has been about 22% more volatile than the S&P 500. That turns a clear absolute performance winner into only a marginal risk-adjusted performance winner.

That's fine when there's a big bull market in tech stocks. If the market begins to rotate away from tech, that could turn the QQQ Trust not just into a laggard, but a high-risk laggard.

Plus, by choosing the QQQ Trust over the S&P 500 ETF, you're really making a bet that tech will continue to outperform. In the early stages of 2026, that hasn't been the case.

Which ETF is the better buy?

There's no question that the Invesco QQQ Trust has been an elite performer for years. But at this point, I think the Vanguard S&P 500 ETF is the better buy.

The market is showing signs of broadening out beyond the tech sector, and that gives the S&P 500 ETF a distinct advantage. If concerns about a slowing economy or a cooling labor market continue to play out, investors may soon shift to defense and away from expensive tech stocks.

Over the long term, a more diversified S&P 500 ETF is the better play.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Tesla, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.