Both the Vanguard S&P 500 ETF (NYSEMKT:VOO) and the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) are popular large-cap US exchange-traded funds (ETFs), but they take different approaches.

VOO tracks the broad S&P 500, while QQQ tracks the more tech-focused NASDAQ-100. This comparison examines cost, yield, risk and portfolio composition to help investors determine which option best suits their goals.

Beta measures price volatility relative to the S&P 500. The 1-year return represents the total return over the trailing 12 months.

VOO is more affordable in fees with a lower expense ratio than QQQ and also offers a significantly higher dividend yield. These factors could make VOO more attractive to fee-conscious or income-focused investors.

QQQ tracks the NASDAQ-100, resulting in a portfolio of 101 holdings with a heavy tilt toward technology (accounting for 53% of assets), communications services (17%), and consumer discretionary (13%). Its main holdings are Nvidia, Applei Microsoft.

By comparison, VOO spreads its assets across 504 stocks in the S&P 500. Technology makes up 35% of the fund, followed by financial services at 13% and communications services at 11%. Its top holdings mirror the QQQs, but the broader sector mix may appeal to those looking for more diversification.

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VOO and QQQ are massive funds with a long history, focused exclusively on large capitalization stocks. However, their different approaches may appeal to different types of investors.

VOO is the more diversified of the two, tracking the S&P 500 and holding stocks across all market sectors. This diversification helps limit your risk during market downturns as it is not as heavily skewed towards any one industry.

QQQ, on the other hand, is much more focused on growth. Most of the fund goes to tech stocks, which can be a double-edged sword. While technology can be lucrative, it is also notorious for its volatility.

Between these two ETFs, QQQ has experienced more volatility. It has a steeper maximum drawdown and a higher beta, indicating more severe price fluctuations than VOO. However, QQQ has also outperformed VOO in both 12-month and five-year total returns.

The right choice will depend on your investment goals. If you’re looking for a more diversified ETF with a stronger track record of stability, VOO’s S&P 500 approach might be more attractive. However, those who are comfortable with more volatility in exchange for greater growth potential may prefer QQQ.

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Katie Brockman has positions in the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends the Apple, Microsoft, Nvidia and Vanguard S&P 500 ETFs. The Motley Fool has one disclosure policy.

QQQ vs. VOO: Which Powerhouse ETF is the best buy for investors right now? was originally published by The Motley Fool