Is IVV or QQQ a Better Choice for Investors? How These Popular ETFs Compare on Risk and Returns

The iShares Core S&P 500 ETF (NYSEMKT:IVV) stands out for its lower fees, broader sector coverage, and higher yield, while the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) emphasizes tech-heavy growth and recent outperformance.

Both funds rank among the largest and most liquid ETFs in the U.S. IVV targets the S&P 500, providing exposure to 500 leading U.S. companies across various industries, while QQQ tracks the NASDAQ-100, focusing on technology and growth names. Here’s how they compare on cost, performance, risk, and portfolio makeup.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

IVV is more affordable with a lower expense ratio than QQQ. It also pays out a higher dividend yield, which may appeal to income-focused investors.

Performance & risk comparison

What's inside

QQQ leans heavily into technology (55%), communication services (17%), and consumer cyclicals (13%), with top positions in Nvidia, Apple, and Microsoft. This tilt results in higher growth potential but also greater volatility and deeper drawdowns, especially during market corrections. QQQ holds just over 100 names, providing less sector diversification than IVV.

IVV tracks the S&P 500, holding 503 stocks across all major sectors, with the largest allocations to technology (34%), financial services (14%), and communication services (10%). Its top holdings match QQQ’s, but IVV’s portfolio is more diversified and less concentrated in tech. With over 25 years of history, IVV has established itself as a core holding for broad U.S. equity exposure.

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What this means for investors

The primary difference between IVV and QQQ comes down to strategy.

IVV is a broad market fund that tracks the S&P 500 and aims to replicate the index's performance. QQQ, on the other hand, is a growth fund that's designed to earn above-average returns over time.

Between the two funds, IVV is the more stable. It offers more diversification than QQQ with more holdings and less of a tilt toward the technology industry, and it's also experienced a milder max drawdown with a lower beta -- indicating fewer price fluctuations over the last five years.

IVV also boasts both a lower expense ratio and a higher dividend yield. Investors can expect to pay $3 per year in fees for every $10,000 invested in IVV, compared to $20 per year with QQQ. IVV's higher yield can also be an advantage for income-focused investors.

Where QQQ shines, though, is its growth potential. It's earned higher one- and five-year returns than IVV, and over time, those additional earnings can add up significantly.

Both funds are powerhouse investments that could fit a wide variety of portfolios. Investors who prioritize consistency and diversification may opt for IVV's S&P 500 stability, while growth-oriented investors may prefer the higher returns offered by QQQ.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges and holds a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund or stock divided by its current price, expressed as a percentage.
Beta: A measure of an investment's volatility compared to the overall market; 1.0 means equal volatility to the market.
AUM: Assets under management; the total market value of assets a fund or manager oversees.
Drawdown: The decline from a peak to a trough in the value of an investment, usually shown as a percentage.
S&P 500: A stock index tracking 500 large U.S. companies across various industries; a benchmark for U.S. equities.
NASDAQ-100: An index of the 100 largest non-financial companies listed on the NASDAQ stock exchange, mainly tech-focused.
Sector diversification: Investing across different industry sectors to reduce risk from any single sector's poor performance.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Growth of $1,000: How much a $1,000 investment would be worth after a set period, including price gains and 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.