The XLK vs. QQQ debate has been ongoing for some time now. Both funds offer investors a way to get exposure to the tech sector, but which is better for your portfolio?
|Funds||Technology Select Sector SPDR® Fund||Invesco QQQ Trust|
|3-year total return||+20.58%||+17.59%|
|3-year standard deviation||22.82%||22.71%|
|Min. initial investment||—||—|
|Net expense ratio||0.10%||0.20%|
|Total net assets||40.95bn USD||164.34bn USD|
|Morningstar category||Technology||Large Growth|
XLK: Technology Select Sector SPDR Fund
The Technology Select Sector SPDR (XLK) is an exchange-traded fund that tracks the S&P technology sector. The fund was launched in 1997 and has seen steady growth since then.
XLK is one of the largest funds in its category, with over $40 billion in assets under management (AUM).
The fund’s current expense ratio is 0.10%.
QQQ: Invesco QQQ Trust Series 1
QQQ is an exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100 Index.
The fund is managed by Invesco and trades on the Nasdaq stock exchange.
QQQ holdings include Apple, Microsoft, Amazon, Facebook, and Google. It also provides exposure to many other leading technology companies, such as Intel, Cisco, and Oracle.
XLK vs QQQ: Key differences
Here are some of the key differences between XLK and QQQ:
- XLK has a lower expense ratio than QQQ, which means that it’s cheaper for you to buy (and hold) XLK.
- XLK has an overall market cap of $40.95 billion, while QQQ has $164 billion in assets under management. QQQ is noticeably larger than XLK.
- There are only 79 stocks in XLK’s portfolio, while over 100 stocks are in QQQ’s portfolio.
- In the last 10 years, QQQ has outperformed XLK.
XLK vs QQQ: Which Fund is Better?
Our analysis shows that the QQQ is a better buy than the XLK. It has more assets under management and a better performance record over the past ten years.
Despite its high expense ratio, QQQ is still a better choice for investors looking for exposure to high-growth tech stocks without loading up on individual names.