The two most popular technology ETF’s for investors are Fidelity’s FTEC and Invesco’s QQQ, however, it can be challenging to decide which is the best.
Someone asks:
Currently DCA investing into FSKAX and recently started investing in FTEC in my brokerage account. I also have QQQ in my Roth. Do you guys recommend sticking with FTEC or go with QQQ? My overall goal is to maximize gains long term and not touch these funds for another 20+ years. What is the everyone favorite tech based fund to invest in?
FTEC vs QQQ: Fund Objective
FTEC is an exchange-traded fund (ETF) from Fidelity that tracks the performance of the MSCI Information Technology Index. The Fidelity Information Technology Index Fund was created on October 21, 2013, focusing on tracking the performance of the information technology sector in the U.S. equity market. QQQ is the ticker symbol of Invesco QQQ Trust Series 1. It invests in stocks that are in the NASDAQ 100 Index and provides a risk-adjusted return through active portfolio management. The fund was founded on March 10, 1999.
Expense Ratio Comparison
An expense fee is charged to cover the costs of managing an index fund. The expense ratio of Invesco QQQ Trust Series 1 is 0.20%, while the expense ratio of FTEC is only 0.08%.
QQQ Performance Year-to-Date (YTD)
What are QQQ’s Top 10 Holdings?
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| Apple Inc. | AAPL | 11.69% |
| Microsoft Corp. | MSFT | 10.13% |
| Amazon Inc. | AMZN | 6.78% |
| Meta Platforms Inc. | FB | 4.78% |
| Tesla Inc. | TSLA | 4.26% |
| NVIDIA Corp. | NVDA | 4.15% |
| Alphabet Inc. Cl C | GOOG | 3.69% |
| Alphabet Inc. Cl A | GOOGL | 3.50% |
| Broadcom Inc. | AVGO | 1.82% |
| Adobe Inc. | ADBE | 1.80% |
FTEC Performance Year-to-Date
What are FTEC’s Top 10 Holdings?
| COMPANY | SYMBOL | TOTAL NET ASSETS |
|---|---|---|
| Apple Inc. | AAPL | 21.57% |
| Microsoft Corp. | MSFT | 17.65% |
| NVIDIA Corp. | NVDA | 5.40% |
| Visa Inc. Cl A | V | 2.69% |
| Mastercard Inc. | MA | 2.33% |
| Broadcom Inc. | AVGO | 2.01% |
| Adobe Inc. | ADBE | 1.99% |
| Cisco Systems Inc. | CSCO | 1.96% |
| Accenture PLC Cl A | ACN | 1.93% |
| Salesforce Inc. | CRM | 1.83% |
As of 12/31/2021 We can clearly see some overlapping stocks in their portfolio. This is not surprising since their investment objectives are similar.
Dividend Yield Comparison
Both FTEC and QQQ pays dividend every quarter. The dividend yield of Fidelity Information Technology ETF is 0.68%, whereas the yield of Invesco’s QQQ is 0.46%.
FTEC vs QQQ: Annualized Return Comparison
Let’s see how both funds have performed over the past five years.
| Funds | Fidelity® MSCI Information Technology Index ETF | Invesco QQQ Trust |
|---|---|---|
| 1 month | +2.61% | +1.17% |
| 3 months | +14.30% | +11.22% |
| 6 months | +15.32% | +12.38% |
| 1 year | +30.40% | +27.24% |
| 3 years | +41.42% | +38.04% |
| 5 years | +31.08% | +28.37% |
An investment of $10,000 in FTEC, since January 2017, now would be worth $38,701, while an investment of $10,000 in QQQ, since January 2017, now would be worth $34,860.
FTEC or QQQ: Which is Better?
While both ETFs do not track the same benchmark, they are identical. QQQ is a solid name if you want exposure to the tech sector. It tracks the NASDAQ-100 index and provides steady returns. What sets Fidelity Information Tech ETF apart from Invesco QQQ is its low expense fee and good track record even though it’s a newer fund.
Community Reviews: Greg B:
FTEC is excellent or superior beating of the S&P 500 Technology track record since its inception in 2013 with a 0.08% Expense Ratio and a 0.35% Tax Cost Ratio at Mild to Mod Risk, which is beating the current liberal uncertain volatility over the past year by a ton @ 34.51%!!!
John D:
FSKAX has a lot of exposure to tech already. The top sector in the total US stock market is information technology. Around 25% compared to the second highest (healthcare) at around 13%. Not sure why a US investor would want more tech exposure than the market gives him but everyone has their reasons.
Davis J:
QQQ, VGT, and SMH are my tech ETFs. Tech is a way of life for people these days. With many new innovations, ain’t gonna miss the growth opportunities for years to come…
Jason P:
QQQM. It’s the same as QQQ but at a lower cost. Unless you need the trading volume of QQQ, the newer QQQM is a better option. FTEC is a great option as well. It is a good fund. I have a small “high-growth” account that uses the top 3 sectors (tech, health, consumer) along with 2 other funds to out-perform the S&P. I see it as a “safe” way to get some high growth disrupter exposure without buying into the Ark hype.
Tom L:
3 year returns: FTEC 29.87, FSCSX 29.29. Both technology plays and great to have, I have both. Also look at FDN and FSPTX.
Micheal M:
My favorite Fidelity ETFs with strong 5-year returns and low expense ratios. The Fidelity MSCI Information Technology Index (FTEC) has roughly a 90% 5-year return with an expense ratio of 0.08!
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