QQQ Our Pick vs VUG
Invesco QQQ Trust vs Vanguard Growth Index Fund ETF Shares
Buy QQQ if…
- •You like performance
- •You want exposure to tech
Buy VUG if…
- •You like smaller drawdowns
- •You enjoy less aggressive concentration
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Two Takes on Large Caps
VUG tracks the CRSP U.S. Large Cap Growth Index while QQQ tracks the Nasdaq-100, and they share most of the same big tech names.
VUG has a crazy low expense ratio of 0.04% compared to QQQ's 0.20%—that's five times cheaper. However, QQQ has outperformed VUG over the past decade with 18.84% annualized returns versus VUG's 16.73%, and it's beaten VUG in 8 out of the last 9 years. The savings on fees are only conceptual.
QQQ is more tech-concentrated (especially in the Nasdaq-100 companies) and therefore more volatile, while VUG is slightly more diversified across growth sectors. So you're paying 0.16% more per year for QQQ's tighter focus and historically better performance.
VUG has had lower drawdowns though—51% max versus QQQ's 83%—so it's been less wild during crashes.
The question is, do you bet on large caps, or on tech stocks?
