QQQ vs VGT: Which Tech ETF Is Better?

Investors mightiness deliberation that due to the fact that the Invesco QQQ ETF (NASDAQ: QQQ) and the Vanguard Information Technology ETF (NYSEMKT: VGT) some put heavy successful tech and maturation stocks, they're interchangeable. They're not.

The Invesco QQQ ETF tracks the Nasdaq-100 index, which simply includes the 100 largest non-financial companies trading connected the Nasdaq exchange. It's astir two-thirds invested successful tech stocks, but it besides includes Walmart, Costco Wholesale, PepsiCo, and Amgen. In different words, companies that reside acold distant from the tech sector.

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The Vanguard Information Technology ETF, however, doesn't person that issue. It tracks the MSCI USA IMI Information Technology 25/50 Index. It's axenic tech vulnerability crossed much than 300 stocks. And that attraction results successful superior performance. Its 10-year mean yearly instrumentality of 25.9% acold exceeds the 21.9% instrumentality of QQQ.

That show advantage, however, comes with attraction risk. Nvidia, Apple, and Microsoft account for astir 43% of the Vanguard ETF's portfolio. That's a batch of vulnerability to conscionable a fewer companies that immoderate investors mightiness not find appealing.

Overall, the Vanguard Information Technology ETF is the superior prime to the Invesco QQQ ETF. Investors mightiness deliberation of the second arsenic a tech fund, but it truly isn't. There's capable of a non-tech allocation to dilute the vulnerability that investors mightiness truly beryllium looking for. And that comes inexpensive and nonstop with the Vanguard ETF.

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