QQQ vs. SPY: QQQ Has Delivered Superior Gains, But It Comes With Higher Risk

Core Insights - The State Street SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust, Series 1 (QQQ) are significant exchange-traded funds (ETFs) in the U.S., each tracking large-cap indices but differing in portfolio composition, risk-return profiles, and costs [2][8] Cost & Size - SPY has an expense ratio of 0.09%, while QQQ charges 0.20%, making SPY more cost-effective [3][4] - As of February 4, 2026, SPY's one-year return is 14.0% and QQQ's is 15.5%, with SPY offering a higher dividend yield of 1.1% compared to QQQ's 0.5% [3][4] - SPY has assets under management (AUM) of $709.2 billion, while QQQ has $405.7 billion [3][9] Performance & Risk Comparison - Over the past five years, SPY experienced a maximum drawdown of 24.49%, while QQQ faced a more significant drawdown of 35.12% [5][10] - An investment of $1,000 in SPY would have grown to $1,770 over five years, compared to $1,828 for QQQ [5] Portfolio Composition - QQQ tracks the NASDAQ-100 Index, with a heavy concentration in technology (55% of assets), and its largest holdings include NVIDIA Corp (8.46%), Apple Inc (7.69%), and Microsoft Corp (5.90%) [6] - SPY tracks the S&P 500, providing broader diversification across 502 companies, with its largest holdings being Nvidia Corp (7.42%), Apple Inc (6.74%), and Microsoft Corp (5.17%) [7] Investment Implications - Both SPY and QQQ are well-regarded ETFs, suitable for various investment strategies, with SPY appealing to those seeking stability and QQQ attracting risk-tolerant investors [8][11] - Both funds have significant exposure to major tech companies, which influences their performance trends [9][10]