QQQ vs. IVV: How Tech-Heavy Growth Compares to Broad Market Diversification

The iShares Core S&P 500 ETF (NYSEMKT:IVV) and the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) both provide exposure to large-cap U.S. equities, but with distinct styles. IVV tracks the S&P 500 for broad market representation, while QQQ focuses on the NASDAQ-100, resulting in a pronounced tilt toward technology and growth stocks. Here’s how their key features stack up.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500.

IVV offers a lower expense ratio, while QQQ charges higher fees but has delivered greater returns over the past year. IVV also pays a higher dividend yield, which may appeal to income-focused investors.

Performance & risk comparison

What's inside

QQQ is built for growth, tracking the NASDAQ-100 with 101 holdings. The fund is heavily weighted toward technology (64%), with fairly significant exposure to consumer discretionary (18%) as well. Its top positions include Nvidia, Microsoft, and Apple. This concentrated sector tilt can lead to greater swings in performance, both positive and negative.

IVV, by contrast, tracks the S&P 500 and holds 503 companies for broader sector representation. Technology remains the largest sector at 36%, but weightings are more balanced with financial services at 13% and consumer discretionary at 11%. Like QQQ, its top holdings are Nvidia, Apple, and Microsoft, but each makes up a smaller portion of the portfolio.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

QQQ and IVV are both fantastic investments in their own ways, and the right fit for you will depend on your goals and risk tolerance.

QQQ offers a more targeted approach, with nearly two-thirds of its holdings allocated to the technology sector. Tech stocks can be lucrative, but they can also be more volatile in the short term.

This ETF has earned significantly higher returns than IVV over the past 12 months, but with a higher expense ratio and lower dividend yield, expect to pay more in fees while earning less in dividend income from this investment.

IVV, on the other hand, carries less risk and offers greater diversification. Because it tracks the S&P 500, it's highly likely it will see positive returns over the long haul -- even if the short term is rocky at times. However, because it aims to closely follow the market, it's impossible for this ETF to beat the market and earn higher-than-average returns.

Glossary

ETF: Exchange-traded fund, a pooled investment that trades on stock exchanges like a single stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover its operating costs.
Dividend yield: The annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of an investment's volatility compared to the overall market; 1.00 means equal volatility.
AUM: Assets under management; the total market value of assets a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Sector diversification: The spread of investments across different industry sectors to reduce risk.
NASDAQ-100: An index of 100 of the largest non-financial companies listed on the NASDAQ stock exchange.
S&P 500: An index tracking 500 of the largest publicly traded U.S. companies, representing broad market performance.
Consumer cyclical: Companies whose sales and profits tend to rise and fall with the economic cycle, like retail and travel.
Growth stocks: Companies expected to grow earnings faster than the market average, often reinvesting profits instead of paying dividends.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. 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.