ETF Showdown: S&P 500 vs Nasdaq 100 — What’s the Difference?

Introduction

If you’ve ever looked into U.S. stock investing, you’ve probably heard these two tickers over and over again: SPY and QQQ. Both are ETFs, both are massively popular, and both are seen as benchmarks of the U.S. market. At first glance, they look similar — but under the hood, they’re quite different.

SPY: A Snapshot of the Entire U.S. Economy

SPY launched back in 1993 as the very first ETF in history. It tracks the S&P 500 Index, which means it holds about 500 of the largest U.S. companies. Think of it as owning the U.S. economy in one basket. It covers every sector, has a low 0.09% expense ratio, and is one of the largest ETFs in the world with more than $600 billion in assets under management.

QQQ: The Tech Titan Fund

QQQ launched in 1999 and tracks the Nasdaq-100 Index. The index excludes financial companies and is dominated by technology stocks. Its top holdings are Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta, with the top handful making up nearly half the fund. In short, QQQ is basically a bet on Big Tech and growth stocks, with an expense ratio of 0.20%.

Performance Over the Past Decade

Since 2010, QQQ has dramatically outperformed SPY. SPY delivered around 12–13% annualized returns, while QQQ delivered 17–18% annualized. If you had invested $10,000 in 2010, SPY would have grown to roughly $30–40k, while QQQ would be over $50k. The reason: the past decade was dominated by tech innovation, which QQQ captured perfectly.

Risk and Drawdowns

Higher returns come with higher risk. QQQ is more volatile. In the 2020 COVID crash, SPY dropped about –34% and QQQ about –28%, but QQQ rebounded faster. In 2022, when the Fed raised interest rates, SPY fell –18% while QQQ plunged more than –30%. SPY is the steady train ride, QQQ is the rollercoaster.

Sector Breakdown

Looking Ahead: Possible Scenarios

• Tech continues to dominate → QQQ could shine again
• Other sectors (finance, energy, industrials) rotate into leadership → SPY’s diversification could pay off
• Mix of both → SPY as the core with QQQ as a growth tilt

Bottom Line

SPY is broad, stable, and diversified, reflecting the whole U.S. economy. QQQ is concentrated, growth-heavy, and more volatile, but with bigger upside during tech booms. The key isn’t which one is better, but understanding their personalities and aligning with your own goals and risk tolerance.

FAQ

• Is QQQ riskier than SPY? → Yes, it has higher volatility and steeper drawdowns.
• Can I hold both? → Many investors use SPY as a core holding and QQQ as a satellite for growth tilt.
• Do fees matter? → Over the long run, SPY’s lower expense ratio compounds into a small advantage.

Sources

• State Street Global Advisors, SPY Fact Sheet (Jun 2025)
• Invesco, QQQ Fact Sheet (Jun 2025)
• ETF.com, MarketBeat, Moneywise, Yahoo Finance