QQQ vs VOO - Comparing Popular Index ETFs! (Which One To Buy For The Long Term?). In this comparison video I will talk about QQQ vs VOO.
So, the main difference between them is their expense ratios.
Currently, QQQ presents with a 0.20% expense ratio, which is at least six times more than what VOO necessitates for services offered. Currently, VOO only calls for 0.03% of the total investments as charges for its fund management costs and other related expenses such as marketing fees. High expense ratios affect investors' returns; hence, going for stocks with the lowest expense ratios is crucial.
VOO wins in this category as it necessitates a small expense fee.
Investment risk
QQQ has a relatively larger investment risk compared to that presented by VOO. Investment risks are assessed by metrics such as Sharpe, Sortino, Omega, Calmar, and Ulcer ratios, which basically calculate risk-adjusted performance. At times, the risk can be evaluated from drawdown comparisons and volatility. Currently, QQQ presents with a higher volatility than that of VOO. The higher the volatility, the larger the investment risk.
Therefore, VOO wins in this category as it has smaller investment risks.
Dividends
Currently, QQQ offer less dividends than those offered by its VOO counterpart. QQQ's average dividend yield for the previous twelve months is about 0.58%, less than half the rate VOO adopts in distributing dividends to its investors. VOO's average dividend yield for the past year twelve months is about 1.36%.
VOO wins in this category as it offers more dividends to its investors.
But do they have any similarities?
Yes. The two ETFs are similar in that they are passively managed to conform to the performances of their respective underlying indices. They also have relatively larger volatilities, which affects fluctuations experienced in their prices. Lastly, their price fluctuations are almost identical, yielding a correlation value of about 0.90.
To sum up, which is better – QQQ or VOO?
Based on my initial experience with both ETFs, I will always choose VOO over QQQ. QQQ presents impressive interest rates for dividend yields and expense ratios, although not as convenient as those offered to VOO investors. On top of that, VOO comes with lower investment risks than those presented by QQQ.
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