QQQ vs. SPY (and VOO) – NASDAQ 100 vs. S&P 500

QQQ from Invesco tracks the NASDAQ 100 Index. SPY from SPDR (and VOO from Vanguard) tracks the S&P 500 Index. These are two very different index funds that track very different indexes. I compare them here.

// TIMESTAMPS:

00:00 - Intro
00:23 - Methodology, Similarities, Differences, Stats, & More
03:32 - Historical Performance
07:17 - Recap
08:21 - Conclusion
09:05 - Disclosure
09:30 - Disclaimer
10:01 - Outro

// SUMMARY:

QQQ and SPY are two very different funds.
QQQ from Invesco tracks the NASDAQ 100 Index. SPY from SPDR tracks the S&P 500 Index.
QQQ is 100 stocks in a handful of sectors, largely concentrated in tech. SPY is 500 stocks spread across all sectors.
QQQ is already inside SPY, comprising 42% by weight. SPY is already over 1/4 tech.
QQQ is purely large cap growth stocks, which are looking extremely expensive relative to history, and fundamentals do not explain their expensiveness.
SPY is basically the same thing as VOO from Vanguard; they track the same index.
QQQ has a fee of 0.20%. SPY is cheaper at 0.09%. VOO is even cheaper at 0.03%.
QQQ has beaten SPY in recent years, but that doesn’t mean it will continue to do so.
QQQ should not replace SPY as a core holding in a diversified portfolio.

Don’t use QQQ as the core of your portfolio. Period. Doing so is purely performance chasing.

Some like to tilt (overweight) with QQQ, but remember that SPY already has a tech tilt because it’s market cap weighted. QQQ is already inside SPY and VOO. If the companies in QQQ do well, they will also rise within SPY, so you already have exposure to their success.

Only time will tell which index outperforms. We can’t know the future, but I would argue that’s the reason for broad diversification in the first place.

#investing #qqq #spy #voo #etfs

// INVEST

// SOCIAL

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[papabear]

Your videos and analysis is always high quality. You made it easy for me to choose VTI over QQQ. Thanks. 🙏

[Lecluyse]

Keep it up man you’ll grow in no time.

[klittlet]

The content you provide is very helpful. Thank you.

[markgabriele]

Hi! I'm a new investor and I'm looking to invest for a long time horizon (several decades). Would you still recommend SPY over QQQ for someone who is willing to stomach a significantly higher volatility? I agree that QQQ is much less diversified, but it seems that over the past 40 or so years, its higher standard deviation has come with a significantly higher average return than the S&P as well. Thanks so much for the great video!

[raphaelyounes]

I have the american part of my portfolio currrently 80% on SP500 ETF, and 20% in NASDAQ100 ETF. This is the asset allocation i have defined, and am confortable with. Every 3 months I do a rebalance of things. (only if my new monthly buyings dont already ballance things that I do small sells to compensate it)

[ArielDiazAilan]

This was very useful for me, thanks! By the way, what do you think is the best option if I don't want to concentrate all of my investment on the US market? I'm 34 years old and thinking of investing approx 66% on stocks and 34% on bonds, but if I think about SPY as the way to invest in stocks, then I realize I will be investing all in the same country. Thank you again!

[gitarzzan]

QQQ is more volatile. So I like to daily automatic buys of it to take advantage of the volatility and I also have a daily investment into VOO for the growth and little more stability.

[sIothbear]

Can you elaborate on your comment, "Good companies tend to make bad stocks, and bad companies tend to make good stocks"? Seems to oppose Warren Buffets recommendation to buy [good] companies, not stocks, so to speak.

[raulasharma]

Thanks for the explanation..I am from India and planning to invest in us markets ..this video really helped 👍

[galaxytrio]

You're talking sense here. Thanks.

[lorenzoquintana]

Very interesting. Essentially the Q’s are a risk because there is little value. So what if my portfolio consists of QQQM and VTV and VXUS, and I tilt depending on how things are going? I start strong with the Q’s and over the years I tilt to value and possibly international. (My portfolio also consists of a few other ETFs)

[yukteshwarbaranwal]

Is VGT from Vanguard considered as an alternative to QQQ?

[christianbakkal]

I am a new trader looking to invest over several decades through index funds. Do you recommend that I only buy one index fund (like SPY) or should I buy multiple (like SPY, VOO, and QQQ). I don't know if only investing in SPY would hurt or help me.

[stephaniebernardino]

is it ok to own voo, vgt and vug together?thank you for the info

[nvass]

If you post like this you'll grow like ben felix

[ilovedca]

lover this vid! completely agree with your thoughts

[jugzster]

I agree, QQQ is just higher beta version of S&P500. I’d rather put the QQQ allocation (non-core holding) in crypto i.e. Bitcoin and Eth. Moves similarly, but with higher upside (and risk!)

[jaymoar]

They do overlap but when usually VOO does good which it always does QQQ will do double. So nothing is wrong in investing in both. International funds and the other you mentioned only bring in like 4%. That’s more of a risk to me.

[ljrockstar]

Can you own both QQQ and VOO or is there too much overlap?

[saichaitanya]

Honestly, most common investors will be better off in the long run sticking to his advice and lazy portfolio.