QQQ vs. SCHG: Which is Best For You?
This article will compare the ETFs QQQ and SCHG to help determine which one is better for your portfolio.
Key Characteristics
SCHG tracks large-cap growth companies
QQQ tracks the Nasdaq-100 Index
SCHG- Schwab U.S. Large-Cap Growth ETF
Launched in 2009, SCHG is a passively managed fund seeking to replicate the Dow Jones U.S Large-Cap Growth Total Stock Market Index.
With roughly 245 holdings, SCHG carves a balanced portfolio and Democratizes exposure to lucrative sectors outside the technology bubble. It leans heavily on large-cap growth entities throughout the various sectors, offering an all-inclusive avenue to ride the growth wave.
QQQ- Invesco QQQ Trust
QQQ, established in 1999, is an ETF tracking the performance of the NASDAQ-100 Index. This fund provides exposure to 100 of the largest non-financial companies on the stock market.
While many believe the QQQ tracks growth companies, it actually just tracks the top 100 companies, which happen to be growth companies.
Performance Comparison
Historically, QQQ has outperformed SCHG by a large margin due to its more concentrated holdings.
QQQ holds around 100 companies, while SCHG holds around 245, giving QQQ more upside potential.
QQQ has more sector diversification, while SCHG has a higher amount of holdings.
If you are specifically focused on growth companies, SCHG is better for you, while QQQ is better for those looking for a broader market ETF.
Dividend Comparison
SCHG pays a dividend yield of 0.42%, while QQQ pays a dividend yield of 0.55%.
Dividends are generally not the highest priority for growth investors, but they add a nice cherry on top of the returns of these ETFs. These dividends can offer a regular income stream to investors or an opportunity to reinvest for compounded returns.
Expense Ratio Comparison
QQQ - 0.20%
SCHG - 0.04%
When it comes to expense ratios, SCHG has a discernible superiority with a significantly low expense ratio of 0.04%.
This is notably lower than QQQ’s slightly higher expense ratio of 0.20%. It implies that for every $10000 invested, SCHG investors would incur a minimal $4 fee, compared to $20 with QQQ – an important factor to consider for cost-conscious investors.
Wrapping Up
Comparing QQQ and SCHG underlines the principle that no singular investment vehicle is universally superior.
Both are excellent choices for investors, but each has its own strengths and weaknesses.
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FAQ
Is SCHG a good long-term investment?
Yes, SCHG is generally considered a commendable long-term investment. It provides broad exposure to large-cap U.S. companies that exhibit promising growth potential.
Also, its relatively low expense ratio and effective diversification across sectors contribute to its allure for a long horizon. However, remember investing inherently involves risk, and past performance does not guarantee future returns.
What is the Schwab version of QQQ?
There isn’t a direct Schwab equivalent to QQQ, which tracks the NASDAQ-100 Index. Schwab offers SCHG, which follows the Dow Jones U.S. Large-Cap Growth Total Stock Market Index and implies a broader portfolio exposure across various growth-sector companies rather than a technology-concentrated ETF similar to QQQ.
