Looking for your next investment? Let’s take some time to learn more about two popular choices that you can consider as part of your investment strategy – ONEQ vs. QQQ.
There are a lot of investment options available today. You need to do your own research when you are looking for your next investment purchase. You do not want your hard-earned money to be locked in a dead-end fund. You would always want to choose the best available option to grow and earn your money.
When considering which option or funds to trade, what are the factors you should consider? As investments are a very important part of your financial plan, carefully carving out an investment strategy is as important as the option or fund you choose.
As there is so much financial advice out there, let’s deep dive into a specific type of fund that may help your choice easier.
ONEQ Vs. QQQ – Overview
One of the benefits of Exchange Traded Funds (ETFs) over mutual funds is that they are more readily available. You can buy ETFs from a wide range of investment websites and apps. This is unlike mutual funds, where you can only invest through the issuing brokerages.
If you consider investing in ETFs, two popular options worth considering are ONEQ and QQQ. Both ETFs are US stock large growth funds. This means that they both invest in almost similar investments.
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ONEQ: Fidelity Nasdaq Composite Index ETF
ONEQ’s goal is to provide results similar to the yield of the NASDAQ Composite Index. Around 80% of the ONEQ index is invested in common assets that are part of the index.
The fund uses the statistical sampling method to consider different factors such as capitalization, industry exposure, price to earnings (P/E) ratio, dividend percentage, price to book (P/B) ratio, and earnings growth. Those ratios are used to compose the same investment portfolio as the whole NASDAQ.
The fund also invests a big part of its portfolio in the large-cap market. This makes it riskier because there are a couple of large companies that dominate the ETF. For example, 11% of the fund is invested in Apple and almost 10% in Microsoft.
Just like the market that it tracks, ONEQ is usually a game of growth. It usually has a higher P/E and P/B ratio while paying low dividends.
QQQ: Invesco QQQ Trust Series
Also known as Invesco stocks trust, QQQ seeks to provide investment results corresponding with the NASDAQ-100 index. This index measures the average performance of a wide range of equities issued by the top 100 non-financial companies listed in the NASDAQ stock market.
QQQ consists of the top 100 key NASDAQ stocks in the investor’s one trade portfolio. But the best part is that it doesn’t consider financial companies. Instead, it focuses the investor’s portfolio on companies in the fastest-growing sectors.
Instead of choosing individual tech stocks that perform well, you can buy them all at once with QQQ. Therefore, QQQ is a great way of owning a part of the companies creating the future economy.
QQQ ranks 5th when it comes to the most popular exchange-traded funds. It holds investors’ assets worth over $182 billion. Even though it isn’t a broad market ETF like VOO vs. VTI, it has some of the most valuable stocks that trade on the NASDAQ. This means that it invests heavily in the technology sector.
Considering that technology is one of the best performing sectors, giants like Microsoft, Apple and Amazon are key parts of the ETF. Therefore, the fund is mostly considered to be a snapshot of the performance of the technology sector.
During a bullish market, QQQ gives investors big returns. The ETF offers great potential for long-term growth and has low fees. But on the other hand, during a bear market, QQQ declines by a bigger margin. It also invests in a high-risk sector. In times like these, it looks overvalued and doesn’t hold any small-cap stocks.
ONEQ vs. QQQ: Key Differences
One of the major differences between the two is that while ONEQ invests in 1,017 stocks, QQQ consists of 102 stocks. Also, about 25% of ONEQ is invested in the small, medium, and micro capitalization companies, while all the QQQ investments are in the large-capitalization companies.
Another key difference between the two funds is in the total assets under their management. This is important as it indicates the investor trusts in the fund. While a large fund doesn’t necessarily mean it’s a better option, this is one of the key considerations when choosing a fund.
That said, ONEQ is a medium-sized fund that has assets worth $4.56 billion under its management. On the other hand, QQQ is a large fund whose assets under management are worth $194.56 billion.
Here is a summary of the key differences between the two funds.
|Segment||US-Large Capitalization stocks||US-Total market stocks|
|Net assets||$194.56 billion||$4.56 billion|
|Number of stocks||102||1,017|
|Management style||Passive and index-based||Passive and index-based|
|Percentage of top 10 holding||50.74%||44.11%|
|Underlying index||NASDAQ-100 Index||NASDAQ Composite Index|
ONEQ Vs. QQQ: Composition Differences
The QQQ fund mostly consists of technology and communication stocks. They account for over 2/3 of the index.
The heavy concentration of the sector is still a huge risk. In case of a correction of the tech stocks, QQQ will suffer more than the S&P 500 tech stocks. That said, the composition of QQQ by industry is as follows:
- Information technology (IT): 48.3%
- Communication services: 20%
- Consumer discretionary: 17.0%
- Medical care: 6.6%
- Consumer goods: 4.9%
- Industrials: 2.8%
- Utilities: 0.9%
About 56% of QQQ holdings are in the following stocks:
- Apple: 13%
- Microsoft: 10.7%
- Amazon: 10.62%
- Facebook: 4.42%
- Alphabet Class A: 3.89%
- Alphabet Class C: 3.78%
- Tesla: 3.22%
- NVIDIA Corp: 2.75%
- Paypal: 1.94%
- Adobe: 1.91%
On the other hand, about 46% of ONEQ staples consist of:
- Apple: 11.1%
- Microsoft: 9.14%
- Amazon: 9.07%
- Facebook: 3.78%
- Alphabet Class A: 3.22%
- Alphabet Class C: 3.22%
- Tesla: 2.16%
- NVIDIA Corp: 1.84%
- Paypal: 1.29%
- Adobe: 1.27%
ONEQ Vs. QQQ: Performance Differences
The 5-years return of QQQ has been better than ONEQ (26.83% vs. 24.24%). However, the performance of QQQ over the years has also been great. During the second quarter of 2021, it went up by 44% over the past 12 months. Over the past 5 years, it has been growing at an annual rate of 28%. Over the last 5 years, it also has been growing at an annualized rate of 28%.
Here is a summary of the QQQ returns and performances:
- Year to date: 19.41%
- Last one month: -0.16%
- Three-month return: 6.82%
- One year return: 41.42%
- Three-year returns: 27.54%
- Five-year return: 26.83%
- Ten-year return: 22.51%
Here is a summary of the performance and returns of ONEQ:
- Return of year to date: 16.92%
- One month return: 0.27%
- Three-month return: 4.79%
- One-year return: 41.49%
- Three-year return: 24.61%
- Five-year return: 24.24%
- Ten-year return: 20.97%
ONEQ Vs. QQQ: Fees
If you would like to experience the growth of your portfolio, pay attention to the fees charged. A fund with high fees will not grow as fast.
Fortunately, the two funds have very minimal fees. Most precisely, the expense ratio of ONEQ is 0.21%. On the other hand, QQQ has an expense ratio of 0.20%. Therefore, the fees charged by the two funds are almost very similar, but QQQ has slightly lower fees.
ONEQ Vs. QQQ: Which Of The Two Funds Is Better?
The two funds are US stocks large growth funds, and therefore, it’s best to invest in one of them but not both. The choice that you make will depend on your investment goals.
For investors searching for a high-growth stock with huge potential, they should go for QQQ. Since it invests in the technology sector that is already rallying back, it should see huge growth in its portfolio.
Based on the above performances, it’s clear that QQQ performs a bit better. This indicates that the mid, small, and micro caps didn’t necessarily improve performance over the last couple of years. You may be better off investing in the large-cap.
If you want to increase the mid and micro companies in your portfolio, you might want to consider ONEQ. In the last 10 years, both ETFs performed considerably well, and therefore, you may not go wrong in choosing both of them.
Frequently Asked Questions: ONEQ Vs. QQQ
Here are some of the frequently asked questions on the two funds:
What Is The Fidelity Equivalent Of QQQ?
The Fidelity equivalent of QQQ is ONEQ. This is followed by FUSEX that tracks 80% of the investment of the S&P 500.
Does Vanguard Have A QQQ Equivalent?
VOO is very much similar to QQQ as it’s also a high-quality fund. Both funds have asset capitalization of over $100 billion under their management. Both funds have a lower expense ratio.
Conclusion – ONEQ Vs. QQQ
Now that you have read through the pros and cons of these funds, the next step would be to choose which one you should select. And this depends on what is your current financial situation, your financial goals, and the level of risk you want to take.
The choice is really yours. And since it is part of your overall financial goals to add to your monthly income stream, add to your savings account, or build up your retirement account, the choice between ONEQ or QQQ should be made carefully.
So start and build up your investment portfolio now. Setting this up as early as now will be more beneficial for you down the line. Always remember that to grow a tree, and in this case, your money tree, plant your seed now and reap the fruits later on in your life. Let the path to financial success starts now.
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Marjolein is a financial consultant who has built over €4,000 monthly passive income and saves over 70% of her income. Read Radicals’ inspiring story, from stuck in the 9-to-5 to loving life. Feel free to send Radical a message at the bottom of this page