QQQ vs XLK: What’s The Difference? 2023
LAST UPDATED: July 26, 2023 | By Conrad Golly
The Investco QQQ Trust (QQQ) and the Technology Select Sector SPDR Fund (XLK) are both interesting ETFs. QQQ tracks NASDAQ-100 Index and XLK tracks Technology Select Sector Index. So, what’s the difference between QQQ vs XLK? And which fund is better?
QQQ vs XLK: The expense ratio of QQQ is 0.20% and XLK is 0.10%. QQQ’s biggest holding is Microsoft Corp and XLK’s biggest holding is Microsoft Corp. Overall, QQQ has provided -0.56% Lower returns than XLK over the past ten years.
In this article, we’ll compare QQQ vs XLK. We’ll look at holdings and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss QQQ’s and XLK’s industry exposure, risk metrics, fund composition and examine how these affect their overall returns.Summary QQQ vs XLK
XLK vs QQQ Table
| BND | IUSB | |
| Name | Investco QQQ Trust | Technology Select Sector SPDR Fund |
| Category | Large Growth | Technology |
| Issuer | Invesco | SPDR State Street Global Advisors |
| AUM | $202.156B | $47.19B |
| Avg. Return | 17.40% | 17.97% |
| Div. Yield | 0.58% | 0.80% |
| Expense Ratio | 0.20% | 0.10% |
The Investco QQQ Trust (QQQ) is a NASDAQ-100 Index fund that is issued by Invesco. It currently has $202.156B total assets under management and has yielded an average annual return of 17.40% over the past 10 years. The fund has a dividend yield of 0.58% with an expense ratio of 0.20%.
The Technology Select Sector SPDR Fund (XLK) is a Technology Select Sector Index that is issued by SPDR State Street Global Advisors. It currently has $47.19B total assets under management and has yielded an average annual return of 17.97% over the past 10 years. The fund has a dividend yield of 0.80% with an expense ratio of 0.10%.
QQQ’s dividend yield is Lower than that of XLK (0.58% vs 0.80%). Also, QQQ yielded on average -0.56% Lower per year over the past decade (17.40% vs 17.97%). The expense ratio of QQQ is 0.10% percentage points Higher than XLK’s (0.20% vs 0.10%).
Fund Composition QQQ vs XLK
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Industry Exposure Table vs QQQ
Industry Chart
| QQQ | XLK | |
| Technology | 51.11% | 0.9973 |
| Industrials | 3.90% | 0 |
| Energy | 0.37% | 0 |
| Communication Services | 16.53% | 0 |
| Utilities | 0.98% | 0 |
| Healthcare | 5.86% | 0 |
| Consumer Defensive | 5.16% | 0 |
| Real Estate | 0.25% | 0 |
| Financial Services | 0.50% | 0 |
| Consumer Cyclical | 15.18% | 0 |
| Basic Materials | 0 | 0 |
The Investco QQQ Trust (QQQ) has the most exposure to the Technology sector at 51.11%. This is followed by Communication Services and Consumer Cyclical at 16.53% and 15.18% respectively. Basic Materials (0.25%), Real Estate (0.37%), and Energy (0.50%) only make up 1.12% of the fund’s total assets.
QQQ’s middle weighted sectors is made up with moderate exposure to Financial Services, Utilities, Industrials, Consumer Defensive, and Healthcare stocks at 0.98%, 1.71%, 3.90%, 5.16%, and 5.86%.
The Technology Select Sector SPDR Fund (XLK) has the most exposure to the Technology sector at 0.9973. This is followed by Basic Materials and Basic Materials at 0.0202 and 0 respectively. Basic Materials (0), Basic Materials (0), and Basic Materials (0) only make up 0 of the fund’s total assets.
XLK’s middle weighted sectors is made up with moderate exposure to Basic Materials, Basic Materials, Basic Materials, Basic Materials, and Basic Materials stocks at 0, 0, 0, 5.16%, and 5.86%.
QQQ is -48.62% Less exposed to the Technology sector than XLK (51.11% vs 99.73%). QQQ’s exposure to Communication Services and Consumer Cyclical stocks is 16.53% More and 15.18% More respectively (16.53% vs. 0.00%) and (15.18% vs. 0.00%).
In total, QQQ’s bottom three industries, Energy, Real Estate, and Basic Materials also make up 1.12% Higher of the fund’s holdings compared to XLK’s bottom three industries. (1.12% vs. 0).
Holdings Investco QQQ Trust (QQQ)
| QQQ Holdings | Weight |
| Microsoft Corp | 12.89% |
| Apple Inc | 12.46% |
| Amazon.com Inc | 6.82% |
| NVIDIA Corp | 6.80% |
| Tesla Inc | 4.24% |
| Meta Platforms Inc Class A | 4.20% |
| Alphabet Inc Class A | 3.75% |
| Alphabet Inc Class C | 3.66% |
| Broadcom Inc | 2.42% |
| PepsiCo Inc | 1.71% |
QQQ’s Top Holdings are Microsoft Corp, Apple Inc, Amazon.com Inc, NVIDIA Corp, and Tesla Inc at 12.89%, 12.46%, 6.82%, 6.80%, and 4.24%.
Meta Platforms Inc Class A (4.20%), Alphabet Inc Class A (3.75%), and Alphabet Inc Class C (3.66%) have a slightly smaller but still significant weight. Broadcom Inc and PepsiCo Inc are also represented in the QQQ’s holdings at 2.42% and 1.71%.
Holdings Technology Select Sector SPDR Fund (XLK)
| QQQ Holdings | Weight |
| Microsoft Corp | 0.2417 |
| Apple Inc | 0.2283 |
| NVIDIA Corp | 0.0565 |
| Broadcom Inc | 0.0419 |
| Salesforce Inc | 0.0277 |
| Cisco Systems Inc | 0.0253 |
| Accenture PLC Class A | 0.0239 |
| Adobe Inc | 0.0237 |
| Advanced Micro Devices Inc | 0.0237 |
| Oracle Corp | 0.0202 |
QQQ’s Top Holdings are Microsoft Corp, Apple Inc, NVIDIA Corp, Broadcom Inc, and Salesforce Inc at 0.2417, 0.2283, 0.0565, 0.0419, and 0.0277.
Cisco Systems Inc (0.0253), Accenture PLC Class A (0.0239), and Adobe Inc (0.0237) have a slightly smaller but still significant weight. Advanced Micro Devices Inc and Oracle Corp are also represented in the ’s holdings at 0.0237 and 0.0202.
Risk Analysis QQQ vs XLK
| SCHD | SDY | |
| Mean Return | 1.4 | 1.75 |
| R-squared | 84.91 | 77.4 |
| Std. Deviation | 23.47 | 23.92 |
| Alpha | -1.12 | 7.8 |
| Beta | 1.19 | 1.23 |
| Sharpe Ratio | 0.65 | 0.82 |
| Treynor Ratio | 11.31 | 15 |
The Investco QQQ Trust has a Standard Deviation of 23.47 with a Alpha of -1.12 and a Treynor Ratio of 11.31. Its Sharpe Ratio is 0.65 while QQQ’s Beta is 1.19. Furthermore, the fund has a Mean Return of 1.4 and a R-squared of 84.91.
The XLK has a R-squared of 77.4 with a Mean Return of 1.75 and a Standard Deviation of 23.92. Its Sharpe Ratio is 0.82 while XLK’s Alpha is 7.81. Furthermore, the fund has a Beta of 1.23 and a Treynor Ratio of 15.
Performance QQQ vs XLK
Annual Returns QQQ vs XLK
| Year | QQQ | XLK |
| 2022 | -32.58% | -0.2773 |
| 2021 | 27.42% | 0.3474 |
| 2020 | 48.62% | 0.4361 |
| 2019 | 38.96% | 0.4986 |
| 2018 | -0.12% | -0.0166 |
| 2017 | 32.66% | 0.3425 |
| 2016 | 7.10% | 0.1502 |
| 2015 | 9.45% | 0.0549 |
| 2014 | 19.18% | 0.1785 |
| 2013 | 36.63% | 0.2625 |
| 2012 | 18.12% | 0.153 |
| 2011 | 3.38% | 0.0261 |
QQQ had its best year in 2020 with an annual return of 48.62%. QQQ’s worst year over the past decade yielded -32.58% and occurred in 2022. In most years the Investco QQQ Trust provided moderate returns such as in 2019, 2013, and 2017 where annual returns amounted to 31.35%, 32.39%, and 21.77% respectively.
The year 2019 was the strongest year for XLK, returning 0.4986 on an annual basis. The poorest year for XLK in the last ten years was 2022, with a yield of -0.2773. Most years the Technology Select Sector SPDR Fund has given investors modest returns, such as in 2020, 2021, and 2017, when gains were 19.16%, 17.56%, and 16.26% respectively.
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Performance Comparison QQQ vs XLK
| Fund | Initial Balance | Final Balance | CAGR |
| QQQ | $10,000 | $38,627.90 | 16.20% |
| XLK | $10,000 | $44,048.88 | 17.91% |
A $10,000 investment in QQQ would have resulted in a final balance of $38,627.90. This is a profit of $28,627.90 over 10 years and amounts to a compound annual growth rate (CAGR) of 16.20%.
With a $10,000 investment in XLK, the end total would have been $44,048.88. This equates to a $34,048.88 profit over 10 years and a compound annual growth rate (CAGR) of 17.91%.
XLK’s CAGR is 1.71% Higher than that of QQQ and as a result, would have yielded $5,420.98 More on a $10,000 investment. Thus, XLK Overperformed QQQ by $542.10 annually.
Conrad Golly
I’m Conrad, a retired first responder turned successful Tyapreneur with a passion for real estate, family, and business acquisitions. With a focus on growing online ventures, I bring a wealth of experience to the world of entrepreneurship. I write on investing, personal finance, family life, and business strategies, inspiring others to achieve their goals.
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