저자: RickD'Agostino · 외국인
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QQQ와 SPMO(S&P500 모멘텀 ETF)를 전략·수수료·위험·분산·보유종목·성과 6개 항목으로 비교해 총점 QQQ 45 대 SPMO 44로 QQQ를 근소하게 우위로 평가. SPMO는 최근 1~5년 수익률과 낮은 변동성이 강점, QQQ는 10년 누적수익률과 분산(기술주 집중 리스크 지적)에서 상대적 우위. 수수료 차이가 장기 자산의 3~4% 손실을 낳는다고 강조하고, 두 ETF를 매월 최근 12개월 수익률이 낮은 쪽에 투자하는 '전술적 이중 투자' 방식을 제시.
다듬은 글
What's up everyone? Today we're going to compare my favorite growth ETF QQ with probably the best momentum ETF around which is SPMO, the Invesco S&P 500 momentum ETF. Both these ETFs have outperformed the S&P 500 index both in the short term and in the long term with SPMO having the highest return in the past 12 months with 35% against 26% of QQQ and 18% of EO.
If you don't know me or my channel, I'm Rick. Hopefully your favorite Italian investor after today. And in today's video, we're going to discuss which one of these ETFs, QQQ and SPMO, is a better buy. I'm going to grade six different aspects of these ETFs. And at the end of the video, I will also tell you exactly what would be my approach in choosing between QQQ and SPMO.
And hey, if you haven't done it so far, what about subscribing to the channel? You're going to get tons of videos about investing and finance, both for experienced and beginner investors. It's free and you help me grow this channel. Win-win. So now let's get right to the first aspect of our comparison which is the strategy.
QQQ is the fifth largest ETF for assets management in the whole world preceding only by S&P 5 ETFs and by the stock market and this already shows you how this ETF is appreciated and strong within the whole investing community. Let's not forget that QQ was created in 1999. So it's one of the oldest ETFs around and if it keeps this position after almost 30 years it means it deserves its reputation.
QQQ follows the top 100 market cap weighted non-financial companies which make up the NASDAQ 100 index. You probably know QQQ as the most famous growth ETF. In fact, it's been rated the number one best performing large cap growth fund on the market based on the returns of the last 15 years. And what is the strongest sector in this index?
Information technology. The second ETF is SPMO which is based on the S&P 500 momentum index. This is a really interesting index and ETF that I talked about in my last video, and I'm going to link this video in the description below for you to watch after this. Now, the ETF tracks the performance of stocks within the S&P 500 that have a high momentum score.
For those of you who don't know, momentum is one of the most powerful effects in financial markets. It's the idea that stocks that have performed well recently tend to continue performing well for at least a while longer. So, what does SPMO do? SPMO always finds the ETFs that perform the best within the S&P 500 and picks the 100 best performing ones.
The problem with momentum is that it fades after a while. So, a company that overperforms for a while at some point is going to underperform. That's why SPMO rebalances twice a year to try to detect and avoid fading momentum in the companies. Looking at the perspectives of the ETF, you see that the funds momentum score, namely how they pick the companies within the S&P 500 index is based on price movements and volatility.
So, first the index evaluates how the stock price moved in the past 12 months and then adjusts it based on volatility. When it comes to strategy, choosing the best between QQQ and SPMO is a quite subjective decision because it all boils down to trusting or not momentum. The two strategies are different from each other, but at the same time, they both manage to choose better companies as a whole compared to the S&P 500.
So, if you ask me, I'm not a hard believer of momentum as the only important factor. So, choosing companies only because they perform better lately and have low volatility is not enough reason for me. So, for this reason, I'm going to give nine points to QQQ and seven points to SPMO. The second aspect is the expense ratio which is a percentage of your portfolio invested in this ETF that is paid every year as management fee.
SPMO is a clear winner here with a low expense ratio of 0.13% against 0.2% of QQQ. But the real difference is not so high. In fact, if you're not a day trader, which I suggest you know to be, you can buy QQ's little brother, which is QQQM or QQQ Mini, which is the same identical ETF but reduces the expense ratio from 0.2 2 to 0.15%.
QQQM has less assets under management and that's why high frequency traders don't use it because it has less liquidity. But come on, we are all long-term investors, right? So, what do we care? Now, since people always talk about expense ratio, but they never show what the effect is in the long term.
Let me show you something. Let's use the mutual fund calculator from Net Wallet. And if you have $10,000 invested and invest $6,000 per year for 30 years, let's say with a rate of return of 10%, if the expense ratio is 0.13% like SPMO, you're going to have spent around $33,000 in fees, which is around 2.6% of your total net worth, while 0.2% fees would mean around $51,000 or 4% of your total net worth gone in fees.
So, I just want this to be clear. fees always sound really low, 0.1%, 0.2% per year. But in the long term, even with passive ETFs, they make you lose about 3 to 4% of your total net worth. So my message to you is don't be dumb. Avoid actively managed funds with 0.4 0.5% expense ratio. And for sure, avoid investing directly with a bank that is going to take 1% or even more every year.
Now, since SPMO has 0.13% and QQQM, the little brother, has 0.15%, the expense ratios are really similar and therefore I'm going to give here seven points to QQQ and eight points to SPMO, bringing QQQ to 16 points against 15 points of SPMO. Now, let's talk about the risks involved with these ETFs. In general, there are different types of risks.
One is the sector risk. This is when something happens that impacts a specific sector. So obviously you don't want an ETF to be too focused on one single sector to avoid the ETF value going down the drain whenever a crash comes. Second risk is the non-diversification risk. This is when performance of a few individual stocks can have an outsiz impact on the entire ETF.
We'll dive deeper into these first two risks later in the video. So now let's just focus on the third risk which is the stock market risk. This is the possibility that the entire stock market takes a hit. markets move in cycles just like the economy. So, if you're investing for the long term, there's not much you can do to completely avoid it.
But what you can do is check how the ETF reacts in a crash like this. If we look, for example, at the long-term performance of these two ETFs, we see that at the end of 2021, during the crash that lasted until the end of 2022, QQQ lost its value much faster than SPMO, gaining almost to the same value at the end of 2023.
Even though it started much better off in 2021, SPMO instead managed to keep almost the same value over the year. This shows how lower the volatility for SPMO is compared to QQQ. This can be seen also from the value of beta, which tells you how volatile an ETF is compared to the total market. SPMO has a beta of 0.94.
That means it showed less volatility than the market, which is always one. QQQ instead has 1.11, so more volatile than the market. Now before saying that SPMO is better because it was less volatile in recent years, let's take a step back and let's see the sharp ratio of the last 10 years. The sharp ratio basically tells you how much the ETF overperformance is due to smart investment decisions or as a result of taking a higher risk.
The higher the fund's sharp ratio, the better its risk adjusted performance. As you can see, SPMO has had indeed a higher sharp ratio in 2022 and 2024, but it wasn't always like this. Between 2019 and 2022, QQQ actually showed a better risk adjusted performance and before that they were really similar.
Now SPMO has had a slightly lower risk lately. So even though they are similar, I'm going to give here six points to QQQ and seven points to SPMO. Bringing both ETFs to 22 points. Point number four is diversification. To find out how diversified the ETFs are, we need to see the number of stocks and the number of sectors and above all how heavy the ETFs are invested in particular stocks.
because if those stocks go bad, the ETF is also going to be affected. Starting with CookieQ, you can see that CookieQ has a way too strong concentration in technology. This is obviously a good thing in periods of bull markets and might be a good thing in the future considering that technology and AI are going to shape our lives more and more in the future, but it does show that QQ is not so well diversified within the sectors.
And this is a factor risk that we can't ignore. Imagine if the technology sector were to crash, which sounds impossible, but it's not. In the next years, it might even crash considering that the price to earning ratio almost reached the value it had in the year 2000. So, if this were to happen, QQQ would be terribly hit because it's so heavy on tech.
Just to give you an idea, QQQ in the year 2000 crashed so much that if you invested in it right before the crash, you'd have to wait 16 long years before recouping your initial investment. Not to make money, just to recoup your loss. Moving to SPMO. SPMO is well distributed among sectors. In fact, technology weights 24%, financials 19, consumer discretionary 15 and so on, showing that no sector has a higher weight than 30%.
Which is a good thing. The style allocation, namely how much the holdings is large cap, small cap, growth or value, is also well distributed. Notice that although most of the holdings are large cap, they're well distributed between value, blend, and growth. Considering the overconentration in technology for QQ, I'm going to have to give here five points to QQ and seven points to SPMO, bringing QQ to 27 points and SPMO in pole position to 29 points.
Aspect number five are the holdings. QQ has 10% in Nvidia, 9% in Microsoft and so on for a total weight of the top 10 companies of 52.5%. SPMO has similar companies although you notice here that more weight is on consumer discretionary in staples for the presence of companies like Walmart and Costco and the total weight of the top 10 holdings is 58%.
In general I prefer here the distribution of QQQ. First of all because the total weight is 52 against 58% of SPMO and second because of the companies themselves. SPMO has over 11% in Nvidia while QQQ 10%. Tesla is in my opinion way too heavy in SPMO compared to QQ. And instead of seeing companies like Netflix, I like to see companies like Alphabet in the top 10.
So for all this reason when it comes to holdings, I'm going to say that QQ has an edge. So I'm going to give eight points to QQ and six points to SPMO, bringing both ETFs to a total of 35 points. All right, let's move now to the last and probably the most important aspect, which is the performance. Before starting, I have a couple of important considerations.
First of all, we've seen the expense ratio before in this video, but for your information, the management fees are already included in the total return. It's always like this with ETFs. So, now that we're going to see the performance of the ETFs, this performance is going to also include the money you lose for the management fees.
I mean, it's going to consider it. And the second observation, obviously, past performance is not a guarantee of future results. I know everybody knows that what happens in the last 12 months or 10 years is not going to happen in the future. But that's the only basis we have to see how in the long term this ETF performed and to try to find a trend.
So by seeing the last 10 15 years we can still get an idea of how both ETFs performed during the long bull markets and also during the crash of the past few years. So now if we start from the performance of the last 12 months, you see that SPMO won with 42% against 29% of QQQ. If we move to the last 5 years, SPMO still wins with 157% against 118% of QQQ.
Notice that the overperformance of SPMO started in 20122 and persisted until now. It gets interesting though when you compare the last 10 years because in the end ETFs can have better or worse cycles. But what really matters for long-term investors is what you can achieve in the long term. And here you can actually see that QQQ was stronger than SPMO with a total return of 479% against 425% of SPMO.
So when I see such a development, I ask myself, how is it that SPMO managed to outperform so strongly in the past few years? For example, we've seen the biggest companies like Nvidia and Meta gain so much in the past years. And during the crash of 2002 where everybody was expecting all these huge companies to crash, they were actually holding up much stronger than the undervalued mid and small cap market.
So this obviously gave an advantage to momentum ETFs like SPMO. If we put the long-term results in a table, you see that QQQ in the last 10 years could have turned a $10,000 investment into $54,000 while SPMO $50,000. The analyzed return for QQQ has been 19.3% compared to 18.4% 4% of SPMO. Even though the maximum draw down, namely the most the ETF has ever lost in a bare market, was an incredible minus 32% for QQQ and only 21% for SPMO.
So, this shows us two things. Number one, QQQ showed a stronger long-term performance, and we shouldn't be blinded by the fact that SPMO overperformed in the past couple of years. Number two, the momentum ETFs tend to have a lower volatility than QQQ. Namely, in case of a crash, we can expect our portfolio to drop less than with QQQ.
Now, considering that in the long term, QQQ performed better and that I believe that the overperformance of SPMO in the past few years is due to dynamics that are not sustainable for the long term, I'm going to give here 10 points to QQ and nine points to SPMO, making QQQ the winner with 45 points against 44 of SPMO.
But now the most important part. I'm going to tell you here how I would approach the investment in QQQ and SPMO in a clever way. But first of all, let me tell you that QQQ and SPMO are both great ETFs and nobody knows which one is going to perform better in the future. We can all draw conclusions from the volatility and the past performance, but the truth is that if SPMO wants to keep overperforming as it did in the past few years, there is some luck involved.
Imagine that the market crashes next year, which is totally possible. At the beginning, SPMO is probably going to crash more because it's more weighted on the top companies which have had the strongest momentum. So, two things can happen. Either the rebalance of SPMO happens right after the beginning of the crash and in this case, SPMO is going to crash less than QQQ or if we are unlucky, the rebalance happens shortly before the crash.
And therefore, you're going to have SPMO losing the most value for at least 6 months until the next rebalance. So my suggestion for investing in these two ETFs would be what I call a tactical double investment which is not only valid for SPMO and QQQ but for whatever two ETFs you find similar and you don't really know which one you want to invest in.
And it works like this. Let's assume that you invest once per month. Every month what you do is you check the return of the two ETFs of the last 12 months and you're going to invest in the one that had the lowest return in the past 12 months. And you just keep investing like this every month. What's going to happen is that in the long term, you're going to invest more in one ETF or the other in the moment in which they are more undervalued while avoiding investing in them when they are overvalued.
So over the long term, you should have around half of your investments in QQQ and half in SPMO because they're pretty similar in returns, but the return that you're going to achieve should be mathematically higher than the average long-term return of both ETFs. Now, if you want to see a video totally dedicated to SPMO, you absolutely need to check this video that I posted recently.
And of course, if you enjoyed this video, don't forget to subscribe to the channel for more videos like this. Thank you all for watching everyone. I wish you a great day or a great evening. And as always, I'll see you in the next video. Ciao.
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