Invesco QQQ or iShares Russell 2000 Growth ETF: Which is the Better Buy?

Core Viewpoint - The Invesco QQQ Trust (QQQ) and iShares Russell 2000 Growth ETF (IWO) serve different investment strategies, with QQQ focusing on large-cap tech and IWO on small-cap growth stocks, highlighting differences in market cap exposure, sector mix, and historical risk [1] Cost & Size - QQQ has an expense ratio of 0.18%, while IWO charges 0.24%, making IWO slightly more expensive [2][3] - As of February 4, 2026, QQQ has a one-year return of 15.5% compared to IWO's 11.6% [2] - Both funds offer a dividend yield of 0.5% and have similar beta values, with QQQ at 1.15 and IWO at 1.14 [2] Performance & Risk Comparison - Over the past five years, QQQ experienced a maximum drawdown of -35.12%, while IWO had a higher drawdown of -42.02% [4] - An investment of $1,000 in QQQ would have grown to $1,828 over five years, whereas the same investment in IWO would have grown to $1,016 [4] Portfolio Composition - IWO tracks over 1,000 small-cap growth stocks, with significant sector weights in industrials (25%), healthcare (23%), and technology (20%) [5] - The top holdings in IWO include Bloom Energy Class A Corp, Fabrinet, and Credo Technology Group, indicating broad diversification [5] - QQQ is heavily concentrated in large-cap technology, with over half of its assets in this sector, including major positions in NVIDIA, Apple, and Microsoft [6] Investment Implications - Both QQQ and IWO represent distinct segments of the growth stock market, suggesting that they may both be valuable additions to a diversified portfolio [7] - QQQ, with approximately $412 billion in assets under management, is one of the largest ETFs and has shown strong performance with average annualized returns of 12% and 20% over the past five and ten years, respectively [8]