The Vanguard Growth ETF (VUG +1.48%) and Invesco QQQ Trust, Series 1 (QQQ +1.91%) are two giants in the growth ETF space. Both aim to track baskets of America’s most prominent growth stocks, but they differ in index construction, cost, and portfolio makeup. Here’s how they stack up for investors comparing large-cap growth options.
Snapshot (cost & size)
| Metric | VUG | QQQ |
|---|---|---|
| Issuer | Vanguard | Invesco |
| Expense ratio | 0.04% | 0.20% |
| 1-yr return (as of Oct. 31, 2025) | 30.28% | 30.01% |
| Dividend yield | 0.43% | 0.47% |
| Beta (5Y monthly) | 1.14 | 1.10 |
| AUM | $342.47 billion | $385.76 billion |
Beta measures price volatility relative to the S&P 500.
VUG is more affordable, with a 0.04% expense ratio compared to QQQ's 0.20%, making it attractive for cost-conscious investors. Both funds currently offer a similar dividend yield with similar one-year total returns.
Performance & risk comparison
| Metric | VUG | QQQ |
|---|---|---|
| Max drawdown (5 y) | 35.61% | 35.12% |
| Growth of $1,000 over 5 years | $2,236 | $2,305 |
What's inside
Invesco QQQ tracks the NASDAQ-100 Index. It contains 101 holdings, with sector weights leaning heavily toward technology (64%), followed by consumer discretionary (18%) and healthcare (4%). Its top holdings include Nvidia, Microsoft, and Apple. The fund has a 26-year history and is more concentrated than other broader growth ETFs.
The Vanguard Growth ETF takes a wider approach, tracking the CRSP US Large Cap Growth Index. Its portfolio also heavily tilts toward technology (62%), but with a slightly higher number of holdings (160). Its largest positions mirror QQQ’s top names, and neither fund carries notable structural quirks.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
QQQ and VUG are very similar funds in many ways. Both contain large-cap growth stocks with a heavy focus on the technology sector, and they've experienced similar total returns over the last five years with nearly identical dividend yields.
The primary differences between them come down to their fee structures and number of holdings. VUG offers a lower expense ratio of 0.04%, meaning you'll pay $4 per year in fees for every $10,000 in your account. Compared to QQQ's 0.20% expense ratio, it's a fairly major difference that could amount to hundreds or even thousands of dollars per year in fees for investors with large account balances.
VUG also has more holdings than QQQ, with 160 compared to 101. Because they have similar sector concentrations, this may not make a notable difference in terms of performance. But for investors seeking either a more diversified or targeted approach, it can be a factor to consider.
Glossary
ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that investors pay to a fund manager.
Diversification: Spreading investments across various assets to reduce risk.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.
Beta: A measure of an investment’s volatility compared to the overall market, typically the S&P 500.
AUM (Assets Under Management): The total market value of assets managed by a fund.
Max drawdown: The largest observed loss from a fund’s peak value to its lowest point over a specific period.
Index construction: The method and rules used to select and weight securities within an index.
Sector weights: The percentage of a fund’s portfolio allocated to different industry sectors.
Concentration: The degree to which a fund’s assets are invested in a small number of holdings.
CRSP US Large Cap Growth Index: A stock market index tracking large U.S. companies with strong growth characteristics.
NASDAQ-100 Index: An index of the 100 largest non-financial companies listed on the NASDAQ stock exchange.
