QQQ vs SPY - Which Is The Better ETF? (A Comprehensive Comparison Of ETFs). In this comparison video I will talk about QQQ vs SPY.
So, the main difference between them is the underlying index
QQQ was launched in March 1999 by Invesco. The role of this EFT was to track the performance of the NASDAQ-100 Index.
SPY on the other hand, was launched in January 1993 by State Street. Its role was to track the performance of the S&P 500 Index.
In this case, therefore, SPY is more reliable with more market experience.
Portfolio Composition
QQQ focus is mainly on the technological and innovative markets. Majority of their clients are tech-related businesses like Google, Apple, Microsoft, and Amazon.
SPY, on the other hand, is more diverse. They aim to have the largest companies in a wide range of industry niches like - technology, financial institutions, and the healthcare industry etc.
SPY is more diversified hence has more investment options.
Growth Strategy
The tech and innovative industry has more potential for growth. As such, QQQ growth strategy involves investing in the largest companies in tech and innovation – especially those with a positive growth trail.
SPY on the other hand, since it’s more diversified, it takes on a more conservative growth strategy. The end goal here is to offer investors stock value and a long but stable growth in investment.
SPY, therefore, has lower risks
But do they have any similarities?
Yes. Both QQQ and SPY are highly popular and have high liquidity. It makes it easy for investors to enter and exit a trade without impacting the price of the EFTs. Additionally, they are both passively managed funds – they only replicate the trend of the underlying Index - hence why they are easy to manage.
To sum up, how do they compare – QQQ vs SPY?
I like that QQQ is niche-specific and focuses on high-revenue businesses. Because of this, it could have better cumulative and annual returns.
What I like about SPY is the diversification it offers catering to the needs and preferences of their diverse clientele.
Both QQQ and SPY are popular EFTs on the market. It is, therefore, difficult to pick one over the other. When making a decision, I would advise one to strongly consider their investment preferences, risk tolerance, and their end goal.
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