QQQ vs XLU
Invesco QQQ Trust, Series 1 vs State Street Utilities Select Sector SPDR ETF
Quick Verdict
XLU has a lower expense ratio. QQQ delivered stronger 1-year returns. QQQ offers more diversification with 103 holdings.
Side-by-Side Comparison
| Metric | QQQ | XLU | Winner |
|---|---|---|---|
| Expense Ratio | 0.18% | 0.08% | |
| AUM | $455.8B | $23.5B | |
| Dividend Yield | 0.41% | 2.64% | |
| Holdings | 108 | 34 | |
| YTD Return | +19.68% | +3.36% | |
| 1Y Return | +26.75% | +4.70% | |
| 3Y Return (annualized) | +26.25% | +14.60% | |
| 5Y Return (annualized) | +15.39% | +8.31% | |
| Volatility (annualized) | 30.6% | 15.1% | |
| Max Drawdown | -83.0% | -55.7% | |
| Fund Family | Invesco (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Mar 10, 1999 | Dec 16, 1998 |
QQQ vs XLU Performance
Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US) and State Street Utilities Select Sector SPDR ETF (XLU) is a ETF from SPDR State Street Global Advisors. Over the past year QQQ returned +26.75% while XLU returned +4.70%. Year to date, QQQ is up 19.68% versus a gain of 3.36% for XLU.
Over three years, QQQ compounded at +26.25% per year against +14.60% for XLU; over five years the annualized figures are +15.39% and +8.31% respectively. Across the full 27-year window we track, QQQ has the edge at +13.15% annualized vs +4.62%. 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 15.1% for XLU. 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 -83.0% for QQQ and -55.7% for XLU. 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 0.25. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
QQQ charges 0.18% per year while XLU charges 0.08%. On a $10,000 position that is $18 vs $8 annually, a gap of $10 per year that compounds over a long holding period. On income, QQQ currently yields 0.41% against 2.64% for XLU.
Holdings Overlap
QQQ and XLU share 4 holdings out of 131 unique holdings combined, representing a 1.2% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, QQQ or XLU?
QQQ has an expense ratio of 0.18% while XLU charges 0.08%. XLU is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, QQQ or XLU?
Over the past year QQQ returned +26.75% vs +4.70% for XLU, so QQQ leads on 1-year performance. Over the longest common window we track (27 years), QQQ annualized +13.15% vs +4.62% for XLU. Past performance does not guarantee future results.
Which is riskier, QQQ or XLU?
QQQ has been the more volatile fund at 30.6% annualized versus 15.1% for XLU. Worst drawdown: QQQ -83.0% vs XLU -55.7%.
Should I hold both QQQ and XLU?
QQQ and XLU have a monthly-return correlation of 0.25, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between QQQ and XLU?
QQQ and XLU share 4 common holdings with a 1.2% weight overlap. Combined, they hold 131 unique securities.
Which pays a higher dividend, QQQ or XLU?
QQQ yields 0.41% while XLU yields 2.64%, so XLU currently pays the higher dividend yield.
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