VOO vs. QQQ: Here's the ETF I'd Personally Buy and Hold for Decades

Vanguard's S&P 500 ETF (NYSEMKT: VOO) and Invesco's QQQ Trust (NASDAQ: QQQ) are both popular exchange-traded funds (ETFs) for long-term investors. VOO tracks the S&P 500 (SNPINDEX: ^GSPC), while QQQ tracks the Nasdaq-100.

Vanguard launched VOO in 2010 as the ETF version of the Vanguard S&P 500 Index Fund, which was launched in 1976. Invesco launched QQQ in 1999. Over the past 10 years, VOO has delivered a total return of 318% with reinvested dividends, while QQQ has generated an even bigger total return of 533%. Let's see why QQQ outperformed VOO by such a wide margin -- and if it's still the better ETF to buy today.

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The differences between VOO and QQQ

VOO and QQQ are both passively managed funds that automatically track their underlying indexes, so they charge much lower fees than actively managed funds. VOO charges an expense ratio of 0.03%, while QQQ charges an expense ratio of 0.18%.

VOO is more broadly diversified because the S&P 500 tracks the country's top 500 companies by market capitalization. The index is rebalanced every quarter to add faster-growing companies and drop weaker ones, so its investors are always exposed to market leaders.

QQQ holds fewer stocks because the Nasdaq-100 only includes the 100 largest non-financial stocks in the Nasdaq Composite Index (NASDAQINDEX: ^IXIC). It excludes financial stocks, which account for about 3% of the index, because they're more dependent on interest rate cycles than on innovation and organic growth. The Nasdaq-100 is rebalanced quarterly and reconstituted annually, so it also gives investors steady exposure to the top-performing stocks.

VOO and QQQ hold many of the same stocks, but QQQ uses a modified market-cap weighting system to prevent the largest companies from dominating the index. That's why Nvidia (NASDAQ: NVDA) -- the top holding for both indexes -- accounts for 8.39% of VOO but only 8.10% of QQQ. But VOO usually holds smaller slices of other top stocks -- including Apple and Microsoft -- because it's more broadly diversified.

Which ETF is a better long-term buy?

Both of these ETFs are reliable investments for investors who don't have the time to micromanage individual stocks. But if I had to choose one over the other, I'd pick QQQ because it holds all of the winners without any exposure to the S&P 500's slower-growth stocks. QQQ's focus on growth might make it more volatile than VOO during market downturns, but it's designed to deliver bigger long-term gains for investors who can tune out the near-term noise.

Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.