SPY vs QQQ: Tech Growth vs Broad Market - Which ETF Wins?

Quick Summary

SPY and QQQ represent different investment strategies. SPY offers broad market exposure across 500 companies and all sectors. QQQ concentrates on 100 technology and growth stocks. They have only 56% overlap with very different risk profiles.

Key differences: QQQ is more volatile but higher growth. SPY is stable with better diversification. QQQ outperformed historically but with bigger drawdowns. Choose SPY for stability, QQQ for growth.

Compare live at /spy-vs-qqq

What Are SPY and QQQ?

SPY - SPDR S&P 500 ETF

Tracks: S&P 500 Index (500 largest US companies)
Launched: January 1993
Assets: Over $500 billion
Expense Ratio: 0.09%
Approach: Broad market diversification

QQQ - Invesco QQQ Trust

Tracks: Nasdaq-100 Index (100 largest non-financial Nasdaq companies)
Launched: March 1999
Assets: Over $250 billion
Expense Ratio: 0.20%
Approach: Tech and innovation focus

Holdings Overlap

SPY and QQQ have approximately 56% overlap - they share large-cap tech stocks but differ significantly overall.

Shared Top Holdings:

Company	Sector	SPY Weight	QQQ Weight
Apple	Tech	7%	9%
Microsoft	Tech	7%	8%
Amazon	Consumer	4%	5%
NVIDIA	Tech	3%	4%
Meta	Tech	2%	3%
Alphabet	Tech	4%	5%
Tesla	Auto/Tech	2%	3%

Key differences:

QQQ excludes financials (no banks)
SPY includes all sectors proportionally
QQQ overweights tech (over 50%)
SPY has balanced sectors (tech is 30%)

See live overlap at /spy-vs-qqq

Sector Allocation

SPY sectors:

Technology: 30%
Healthcare: 13%
Financials: 13%
Consumer Discretionary: 10%
Communication: 9%
Industrials: 8%
Consumer Staples: 6%
Energy: 4%
Real Estate: 2%
Materials: 2%
Utilities: 2%

QQQ sectors:

Technology: 50%
Communication: 16%
Consumer Discretionary: 15%
Healthcare: 6%
Consumer Staples: 5%
Industrials: 5%
Utilities: 2%
Financials: 0% (excluded)
Energy: 0% (minimal)

QQQ is 2x more concentrated in tech. This amplifies both gains and losses.

Performance Comparison

Historical returns:

Period	SPY	QQQ	Outperformer
YTD	+28%	+35%	QQQ
One Year	+29%	+37%	QQQ
Three Years	+13%	+15%	QQQ
Five Years	+15%	+21%	QQQ
Ten Years	+13%	+19%	QQQ

QQQ has consistently outperformed over the past decade due to the tech boom. However, this comes with significantly higher volatility.

2022 bear market example:

SPY fell 18%
QQQ fell 33%

Recovery time:

SPY recovered in 9 months
QQQ took 13 months

Volatility and Risk

Annual volatility:

SPY: 18%
QQQ: 25%

QQQ is 40% more volatile, meaning larger swings both ways.

Maximum drawdown (worst decline):

SPY: -34% (2022), -55% (2008)
QQQ: -54% (dot-com crash 2000-2002), -33% (2022)

Beta (market sensitivity):

SPY: 1.00 (by definition)
QQQ: 1.15 (15% more sensitive)

When SPY moves 10%, QQQ typically moves 11.5%.

Expense Ratios

SPY: 0.09% annually
QQQ: 0.20% annually

On $100,000 invested:

SPY costs: $90/year
QQQ costs: $200/year
Difference: $110/year

Over 30 years, QQQ's higher fee costs approximately $3,300 more per $100K.

Calculate at /expense-calculator

Which Should You Choose?

Choose SPY if:

You want broad market exposure
You prefer lower volatility
You're risk-averse or near retirement
You want better diversification
You follow Bogleheads strategy

Best for: Conservative investors, retirees, diversification seekers

Choose QQQ if:

You believe in tech-driven growth
You can handle higher volatility
You have long time horizon (10+ years)
You want focused growth exposure
You accept concentration risk

Best for: Growth investors, long-term investors, tech bulls

Holding Both?

Maybe. Unlike SPY/VOO, holding both can make sense as a strategic tilt.

Example allocations:

70% SPY + 30% QQQ = balanced with tech tilt
80% SPY + 20% QQQ = conservative with growth

This gives broad market exposure while overweighting tech.

Remember: You're doubling up on big tech (Apple, Microsoft, etc are in both).

Common Questions

Is QQQ too risky?
Depends on goals and timeline. For someone in their 20s saving for retirement, QQQ's volatility is manageable over 40 years. Near retirement, the concentration risk may be too high.

Can QQQ keep outperforming?
Past performance doesn't guarantee future results. QQQ outperformed during the 2010s-2020s tech boom. If tech leadership rotates, QQQ could underperform. Diversification (SPY) reduces this risk.

Why does QQQ have higher fees?
The Nasdaq-100 is more complex to manage. Also, QQQ's demand and performance allow it to charge a premium.

What if tech crashes?
QQQ would likely fall significantly more than SPY due to 50% tech concentration. In the dot-com crash (2000-2002), QQQ lost 83% while SPY lost 49%.

Should I use QQQ for retirement?
Most advisors recommend SPY's broader diversification for retirement accounts. However, younger investors might allocate a portion to QQQ for growth, transitioning to SPY as they age.

Which has better dividends?
SPY has higher dividend yield (1.5%) vs QQQ (0.5-0.7%). Tech companies typically reinvest profits rather than paying dividends.

Conclusion

SPY and QQQ serve different purposes.

SPY is the core holding - stable, diversified, representing the entire US economy. QQQ is the growth satellite - concentrated, volatile, betting on tech dominance.

For most investors, SPY should be the foundation with QQQ as an optional growth tilt (10-30% allocation).

The choice depends on:

Risk tolerance
Time horizon
Belief in tech outperformance
Need for stability