SPY vs. QQQ: Battle of the ETF Behemoths

When it comes to large-cap U.S. equity ETFs, few match the popularity, liquidity, and influence of the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ). While both track major indexes and serve as core holdings in countless portfolios, the similarities stop there. In this post, we break down the most important differences between SPY and QQQ across key dimensions: performance, volatility, valuation, sector exposure, factor makeup, and fees.

Quick Snapshot

Metric	SPY	QQQ
Index	S&P 500	Nasdaq-100
Holdings	~500	100
Expense Ratio	0.09%	0.20%
Top Holdings	AAPL, MSFT, NVDA	MSFT, AAPL, NVDA
Sector Focus	Diversified	Tech-heavy
Annualized Return (2000–2025)	7.52%	7.77%
Max Drawdown	-50.8%	-81.1%
Standard Deviation	15.3%	23.1%

Performance and Volatility: Higher Risk, Higher Reward?

Using Portfolio Visualizer data from 2000 to May 2025, QQQ outperformed SPY slightly with a 7.77% annualized return vs. 7.52%. However, that outperformance came with a cost: QQQ had a maximum drawdown of -81.08%, compared to SPY’s -50.80%. QQQ’s standard deviation was 23.05%, significantly higher than SPY’s 15.27%, indicating greater volatility.

You could also note that over the past 10 years, QQQ’s annualized return was 17.70% versus SPY’s 12.75% – highlighting its strong recent outperformance during a tech-dominated era. But over the full 25-year period, that outperformance narrows considerably.

Factor Exposure: A Tale of Two Strategies

Validea’s ETF Factor Report for QQQ is strongly tilted toward quality and growth factors, with its highest-scoring fundamental metric being Return on Equity. The fund has high exposure to momentum and growth, but weak exposure to value and low volatility. Its beta is 1.27, indicating higher sensitivity to market movements. Meanwhile, the SPY Factor Report shows moderate exposure to quality and stability, with its top factor being Net Margin. SPY has a much lower beta at 0.96, and its factor exposures are more balanced.

In terms of active share, QQQ deviates meaningfully from the S&P 500 at 54.83%, while SPY – by design – has an active share of zero.

Fees: Advantage SPY

SPY charges a 0.09% annual expense ratio, compared to QQQ’s 0.20%. While both are considered low-cost, the difference compounds over time, particularly for long-term buy-and-hold investors.

Holdings and Concentration

Both ETFs are top-heavy, but QQQ is significantly more concentrated. The top five holdings: Microsoft, Apple, Nvidia, Amazon, and Meta, which make up nearly 47% of QQQ’s weight. In SPY, the top five (including Broadcom) account for closer to 30%. This makes QQQ more susceptible to movements in a handful of mega-cap tech stocks.

Sector Exposure

Sector	SPY	QQQ
Technology	32.9%	52.6%
Financials	13.9%	0.4%
Healthcare	9.6%	5.1%
Communication Services	9.6%	15.7%
Consumer Discretionary	10.8%	13.4%

SPY provides exposure across all sectors, including Financials, Energy, and Industrials. QQQ is heavily concentrated in technology and tech-adjacent sectors, offering less diversification.

Historical Stress Test

During the dot-com bust, QQQ suffered an enormous loss, taking over a decade to recover. Since then, its drawdowns have been less extreme, but still larger in magnitude compared to SPY during periods like 2022. SPY has been more consistent in terms of recovery and depth of losses.

Market Crisis	SPY Drawdown	QQQ Drawdown
Dot-com Bust	-44.7%	-81.1%
2008 Crisis	-50.8%	-49.7%
COVID Crash	-19.4%	-12.9%

Drawdowns based on monthly return data, not daily.

Which ETF Is Right for You?

Truthfully, you probably can’t loose with either of these ETFs, but if you had to choose, based on you an investor, here are some ways to think about it.

If you want broad market exposure with low fees and lower risk, SPY is likely the better choice.

If you’re comfortable with higher volatility and are seeking exposure to innovative, high-growth companies, QQQ may be more appealing.

SPY is ideal for core market exposure and diversification, while QQQ is a concentrated bet on tech and the continued dominance of U.S. innovation.

SPY and QQQ are both ETF titans, but are different ETFs at the end of the day. SPY offers exposure to the entire U.S. large-cap market and acts as a core portfolio holding. QQQ, on the other hand, is a more aggressive, growth-tilted fund that has benefited greatly from the rise of big tech.

For investors, the choice between the two comes down to tolerance for volatility, investment goals, and belief in the long-term growth story of the Nasdaq-100 and being OK with investing in stocks that tend to trade at high valuation multiples than many other parts of the market.