FXAIX vs. QQQ – Which is Best For You?
The debate between FXAIX vs QQQ is the classic comparison of the S&P 500 vs the Nasdaq 100. FXAIX will provide more diversity, while QQQ’s concentration may lead to more growth. Additionally, QQQ will experience more volatility, while FXAIX will be more stable due to its diversification. To help you decide between the two, I compiled information about these funds in this article so you can decide which suits your portfolio better.
FXAIX vs. QQQ Key Characteristics
You can use the table below to compare the key characteristics of these funds:
| Metrics | FXAIX | QQQ |
|---|---|---|
| 1-Year Annual Return | 26.29% | 35.01% |
| 5-Year Annual Return | 15.68% | 14.84% |
| Expense Ratio | 0.02% | 0.20% |
| Dividend Yield | 1.69% | 0.62% |
| Number of Holdings | 506 | 101 |
You can compare these funds in real time using the TradingView chart below. Ensure to click the “ADJ” button at the bottom right of the chart to adjust the data for dividends! While TradingView doesn’t support mutual funds, you can change them to the ETF equivalent to see the returns in real time. In this case, the chart below uses the ETF ‘VOO’ as the equivalent of FXAIX.
Overview of FXAIX
FXAIX, the Fidelity 500 Index Fund, is a mutual fund managed by Fidelity Investments. This fund aims to provide investment results that correspond to the total return of stocks of large-cap U.S. companies. It seeks to replicate the performance of the S&P 500 Index, a widely recognized benchmark of U.S. stock market performance and is a standard for most investment portfolios.
FXAIX ETF Equivalents
The ETF equivalent of FXAIX is VOO, which is the Vanguard S&P 500 ETF. Fidelity does not provide an S&P 500 ETF. Here is a list of more FXAIX ETF equivalents:
- VOO
- IVV
- SPY
Overview of QQQ
The Invesco QQQ ETF (QQQ) is a widely recognized exchange-traded fund that tracks the Nasdaq-100 Index, primarily focusing on large-cap technology and telecommunications stocks, and does not hold any financial stocks. It is important for potential investors to recognize that QQQ’s focus on the Nasdaq-100 Index means its performance is closely tied to the tech-heavy index.
While QQQ doesn’t specifically track tech stocks, tech companies happen to be some of the best and largest companies, giving them high allocations to the Nasdaq-100 index. QQQ is also highly liquid, making it great for long-term investors and active traders alike.
Performance Comparison of FXAIX vs. QQQ
The total return performance including dividends is crucial to consider when analyzing different investment funds. QQQ will generally outperform FXAIX since it is less diversified, and solely focused on the top 100 companies, as opposed to 500 companies.
This comes with a drawback, though, because during bear markets, you should expect QQQ to decline harder than FXAIX. If you have a high-risk tolerance and want to shoot for the best returns, QQQ is a good option. However, if you prefer to take less risk, the FXAIX performance will suit you better.
As of 1/15/2024, FXAIX has a one year annualized return of 26.29%, while QQQ has a five year annualized return of 35.01%.
FXAIX vs. QQQ Dividend Yield
Both FXAIX and QQQ pay dividends to their shareholders from the earnings of their underlying stocks. The dividend yield is a measure of how much a company pays in dividends relative to its share price.
QQQ generally has a lower dividend yield than FXAIX since it contains more growth-oriented companies than stable dividend payers. FXAIX contains growth companies as well, but since it has 5x the amount as QQQ, it contains more dividend payers.
The dividend yield of FXAIX is 1.69%, while the dividend yield of QQQ is 0.62%.
FXAIX vs. QQQ Expense Ratios
The expense ratio is a measure of how much an ETF charges its investors for managing the fund. It is expressed as a percentage of the fund’s assets per year.
The expense ratio is one of the most important factors to consider when choosing an ETF because it directly affects your returns over time. The lower the expense ratio, the more money you get to keep from your investment.
FXAIX has an expense ratio of 0.015%, while QQQ has an expense ratio of 0.20%.
FXAIX vs. QQQ Holdings
A fund’s holdings are the basket of individual securities that it owns and tracks. It is crucial for investors to analyze a fund’s holdings because they are effectively what you are investing in by purchasing the fund.
FXAIX holds 506 securities, while QQQ holds 101.
Mutual Funds vs. ETFs
When comparing investment funds, you may be confused about the difference between an ETF and a mutual fund. Keep in mind, an index fund is a specific type of mutual fund. ETFs are tradeable during the stock market hours, while mutual funds only update once per day.
Mutual funds are pooled investment vehicles that are managed by a fund company or an investment advisor. They issue and redeem shares directly to investors at the end of each trading day based on their net asset value (NAV). Investors can buy and sell mutual fund shares through the fund company or a broker.
ETFs are also pooled investment vehicles that are managed by a fund company or an investment advisor. However, they trade like stocks on an exchange throughout the trading day at market prices that may differ from their NAV. Investors can buy and sell ETF shares through a broker.
Some of the advantages and disadvantages of mutual funds vs ETFs are:
- Mutual funds may offer more convenience and flexibility for investors who want to invest a fixed amount of money or set up automatic investments or withdrawals.
- Mutual funds may require a larger minimum investment.
- ETFs may incur bid-ask spreads and premiums or discounts to their NAV, which can affect their trading efficiency and performance.
- Mutual funds may be less tax-efficient than ETFs, as they may distribute more capital gains to their shareholders due to their redemption mechanism.
- ETFs may be more tax-efficient than mutual funds, as they may avoid realizing capital gains through their creation and redemption mechanism.
FXAIX vs. QQQ – Bottom Line
Ultimately, both FXAIX and QQQ are solid investment choices. The choice between the two ultimately depends on the exposure you want and the amount of risk you are willing to take.
Hopefully, the information in this article helps you decide which is better for your portfolio. To continue your research, check out our other fund comparison articles as well!
Comparing ETFs With TradingView
When comparing ETFs, it is crucial that you are comparing the total return to include dividend payments. TradingView allows you to compare several stocks and ETFs at once on a single chart adjusted for dividends.
You can simply sign up for a free TradingView account and type the stock ticker you want to compare.
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- Advanced Charts
- Real-Time Data
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Next, click the plus sign next to the ticker at the top left of the chart to add symbols to compare.
Finally, ensure you click the ‘ADJ’ at the bottom to adjust the returns for dividends!
TradingView is the best way to compare multiple funds and ETFs on a single chart, making your research much easier. Feel free to compare any ETFs you’d like using the widget at the top of this page. Alternatively, sign up for a free TradingView account and use the main website for a better experience. You can also watch the video below to learn how to compare funds with TradingView:
