SPY vs QQQ: Which ETF Is Better for Long-Term Investors?

The Two Most Popular ETFs in the World

If you've spent any time reading about index investing, you've come across SPY and QQQ. Between them, these two funds hold over $1 trillion in assets. But they are fundamentally different products, and choosing between them depends entirely on what you want from your portfolio.

SPY (SPDR S&P 500 ETF Trust) tracks the S&P 500 — the 500 largest publicly traded U.S. companies, weighted by market capitalization. It was the first U.S.-listed ETF, launched in 1993, and remains the most actively traded ETF in the world by volume.

QQQ (Invesco QQQ Trust) tracks the Nasdaq-100 Index — the 100 largest non-financial companies listed on the Nasdaq exchange. Despite what many people assume, QQQ is not purely a "tech ETF." It includes companies like Costco, Booking Holdings, and PepsiCo. But technology stocks dominate at roughly 58% of the portfolio.

You can see the full side-by-side breakdown at ETFDuel.

Historical Returns: QQQ Has Been the Clear Winner

Over the last decade, QQQ has substantially outperformed SPY. Here's how the annualized returns stack up (approximate, through early 2026):

• 10-year annualized return — QQQ: ~18% per year
• 10-year annualized return — SPY: ~13% per year
• 5-year annualized return — QQQ: ~17% per year
• 5-year annualized return — SPY: ~15% per year

That gap is enormous when compounded. A $10,000 investment in QQQ ten years ago would have grown to roughly $52,000. The same investment in SPY would have grown to about $34,000. That's a difference of $18,000 on a single $10,000 bet.

But here's what those numbers don't tell you: past performance does not guarantee future results. QQQ's outperformance has been driven almost entirely by a small group of mega-cap tech companies — Apple, Microsoft, NVIDIA, Meta, Alphabet, Amazon, and Tesla. These companies had an extraordinary decade. The question is whether the next decade looks similar.

Volatility and Drawdowns

The higher returns of QQQ come with higher volatility. During the 2022 rate-hike cycle, QQQ fell about 33% peak to trough. SPY fell roughly 20% over the same period. During the COVID crash in March 2020, both fell sharply, but QQQ recovered faster because tech benefited from the work-from-home shift.

The standard deviation of QQQ's annual returns is typically 5-7 percentage points higher than SPY's. If you're the kind of investor who checks your portfolio every day and loses sleep during market corrections, the concentrated nature of QQQ will make that worse.

Expense Ratios

Both funds are low-cost, but not identical:

• SPY expense ratio: 0.0945%
• QQQ expense ratio: 0.20%

SPY is the cheaper fund. If you prefer a lower-cost Nasdaq-100 exposure, consider QQQM (the retail-oriented twin of QQQ) at 0.15%.

Concentration Risk

One underappreciated risk in QQQ is how concentrated it is. The top 10 holdings account for roughly 50% of the entire fund. Apple alone can represent 9-12% of the portfolio depending on the quarter. In SPY, the top 10 holdings represent about 33% of the fund — still concentrated, but less so.

This matters because concentration risk cuts both ways. It's why QQQ beat SPY so handily in the 2010s — and it's also why QQQ could significantly underperform if big tech faces regulatory pressure, a valuation reset, or simply runs out of growth room.

When to Choose SPY

• You want broad market exposure with less volatility
• You're in or near retirement and prioritize capital preservation over maximum growth
• You already have significant tech exposure elsewhere (e.g., through your employer stock)
• You want the most liquid ETF in the world for trading purposes

When to Choose QQQ

• You have a long time horizon (10+ years) and can tolerate large drawdowns
• You believe technology and innovation will continue to drive economic growth
• You want a satellite holding to complement a core SPY or VTI position
• You understand the concentration risk and accept it

Can You Hold Both?

Many investors hold SPY or VTI as their core position (60-80% of equity allocation) and add QQQ as a growth tilt (10-20%). This gives you broad market coverage while still capturing some of the tech sector's upside. It's not a perfect strategy, but it's reasonable for investors with high risk tolerance and long horizons.

Bottom Line

QQQ has won the last decade by a wide margin, but it carries meaningfully more concentration risk than SPY. For most long-term investors, SPY (or its cheaper cousin VOO) is the more appropriate core holding. QQQ makes sense as a growth tilt if you understand and accept the risks. Compare the two in detail — including holdings overlap, sector weights, and dividend history — at ETFDuel.