IWM vs QQQ
iShares Russell 2000 ETF vs Invesco QQQ Trust, Series 1
Quick Verdict
QQQ has a lower expense ratio. IWM delivered stronger 1-year returns. IWM offers more diversification with 1,996 holdings.
Side-by-Side Comparison
| Metric | IWM | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.19% | 0.18% | |
| AUM | $82.2B | $496.3B | |
| Dividend Yield | 0.91% | 0.44% | |
| Holdings | 1,996 | 108 | |
| YTD Return | +20.15% | +16.23% | |
| 1Y Return | +33.43% | +26.23% | |
| 3Y Return (annualized) | +18.72% | +25.75% | |
| 5Y Return (annualized) | +8.01% | +14.78% | |
| Volatility (annualized) | 20.0% | 30.6% | |
| Max Drawdown | -59.9% | -83.0% | |
| Fund Family | iShares by BlackRock (US) | Invesco (US) | |
| Category | Equity | Equity | |
| Inception | May 22, 2000 | Mar 10, 1999 |
IWM vs QQQ Performance
iShares Russell 2000 ETF (IWM) is a ETF from iShares by BlackRock (US) and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year IWM returned +33.43% while QQQ returned +26.23%. Year to date, IWM is up 20.15% versus a gain of 16.23% for QQQ.
Over three years, IWM compounded at +18.72% per year against +25.75% for QQQ; over five years the annualized figures are +8.01% and +14.78% respectively. Across the full 26-year window we track, QQQ has the edge at +13.02% annualized vs +7.67%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
QQQ has been the more volatile fund, with annualized monthly volatility of 30.6% compared with 20.0% for IWM. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -59.9% for IWM and -83.0% for QQQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.76. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
IWM charges 0.19% per year while QQQ charges 0.18%. On a $10,000 position that is $19 vs $18 annually, a gap of $1 per year that compounds over a long holding period. On income, IWM currently yields 0.91% against 0.44% for QQQ.
Holdings Overlap
IWM and QQQ share 1 holdings out of 1696 unique holdings combined, representing a 0.1% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Top Shared Holdings
| Stock | Weight in IWM | Weight in QQQ | Difference |
|---|---|---|---|
| NXPI | 0.15% | 0.26% | 0.11% |
Frequently Asked Questions
Which is cheaper, IWM or QQQ?
IWM has an expense ratio of 0.19% while QQQ charges 0.18%. QQQ is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, IWM or QQQ?
Over the past year IWM returned +33.43% vs +26.23% for QQQ, so IWM leads on 1-year performance. Over the longest common window we track (26 years), IWM annualized +7.67% vs +13.02% for QQQ. Past performance does not guarantee future results.
Which is riskier, IWM or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 20.0% for IWM. Worst drawdown: IWM -59.9% vs QQQ -83.0%.
Should I hold both IWM and QQQ?
IWM and QQQ have a monthly-return correlation of 0.76, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between IWM and QQQ?
IWM and QQQ share 1 common holdings with a 0.1% weight overlap. Combined, they hold 1696 unique securities.
Which pays a higher dividend, IWM or QQQ?
IWM yields 0.91% while QQQ yields 0.44%, so IWM currently pays the higher dividend yield.
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