Does QQQ's Tech-Focused Growth Outweigh SPY's S&P 500 Stability? What Investors Need to Know

Core Insights - The article compares two popular ETFs, Invesco QQQ Trust (QQQ) and SPDR S&P 500 ETF Trust (SPY), highlighting their differences in cost, returns, and risk profiles [1][6]. Cost & Size Comparison - QQQ has an expense ratio of 0.20% while SPY has a lower expense ratio of 0.09% [2] - As of December 20, 2025, QQQ's one-year return is 18.97% compared to SPY's 15.13% [2] - QQQ offers a dividend yield of 0.46%, whereas SPY provides a higher yield of 1.06% [2] - QQQ has assets under management (AUM) of $403 billion, while SPY has a larger AUM of $701 billion [2] Performance & Risk Comparison - Over the past five years, QQQ experienced a maximum drawdown of -35.12%, while SPY had a lower drawdown of -24.50% [3] - An investment of $1,000 in QQQ would have grown to $1,990 over five years, compared to $1,844 for SPY [3] Portfolio Composition - SPY tracks the S&P 500 Index, holding 503 companies with a significant tilt towards technology (35%), financial services (14%), and consumer discretionary (11%) [4] - QQQ tracks the NASDAQ-100, with a heavier concentration in technology (55%), communication services (17%), and consumer cyclical (13%) [5] - The top three holdings in QQQ (Nvidia, Microsoft, and Apple) account for 25.57% of its total assets, compared to 20.70% for SPY [8] Investment Implications - SPY is suitable for investors seeking broad-market diversification and lower volatility, while QQQ may appeal to those willing to take on more risk for potentially higher returns [6][9] - SPY's higher dividend yield and lower expense ratio make it attractive for income-seeking investors [7] - QQQ's performance is heavily influenced by its top tech holdings, which can lead to higher returns during favorable market conditions [8]