QQQ vs SPY Seeking Alpha

[jongaltiii]

I’m invested in funds and a couple of stocks and some crypto. I’ve never bought an ETF but I have been looking at QQQ … so this article was valuable as it compares the Nasdaq 100 ETF to SPY. I had no idea of the outperformance. 

seekingalpha.com/article/4437276-qqq-vs-spy

[retiredat48]

I was curious.

FSPTX Fido select technology fund (owned since inception) is my largest holding. I ran compare charts with QQQ. Results:

--10 year returns: about even...huge gains

--5 year returns: FSPTX by a large margin ($10,000 went to $42,400; QQQ to $34,200)

--3 yr and 1 yr...FSPTX better.

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Just an observation.

R48

[acksurf]

Jul 2, 2021 22:33:43 GMT retiredat48 said:

I was curious.

FSPTX Fido select technology fund (owned since inception) is my largest holding. I ran compare charts with QQQ. Results:

--10 year returns: about even...huge gains

--5 year returns: FSPTX by a large margin ($10,000 went to $42,400; QQQ to $34,200)

--3 yr and 1 yr...FSPTX better.

-------------------------------

Just an observation.

R48

First Hand Technology Opportunity (TEFQX) also beats QQQ and FSPTX 1,3,5,10 (but not YTD).  That's pretty good FSPTX is your biggest holding.  I don't let large growth/tech run.  I always take profits and put into an allocation fund or VTI.  I've held FSPTX in the past but changed over to QQQ as I don't view technology as a core holding - something I trade somewhat frequently.

[mrc]

Are you sure that you are going to create alpha (assuming your benchmark is S&P 500 or some kind of 70/30 Balanced fund or Index) with tactical asset allocation by overweighting a sector of the market that had significantly outperformed the market?

I use PRGTX for Technology fund, but I have been taking profits in my retirement account.

[chang]

I don't see the rationale for FSPTX. First, tech is 40-60% (or more) of most LCG funds already, including low cost OEFs (like VWUAX) and cheap indexes. Second, FSPTX has had 8 managers in 20 years, so there is no one brain or team responsible for its direction or record. (Current manager has < 1 year in the job and never managed a technology fund before.) If I want more tech I would just bias my portfolio toward growth with good, cheap and stable funds.

[racqueteer]

If you have a high conviction in tech, then more volatility and more tech makes sense.  Just expect the opposite when OUT of favor; OR... participate without as HUGH a reward in favor of a SMALLER downside.  FSPTX, understandably, holds a LOT of tech, but also financials (tech?).  QQQ is a little better diversified; less tech, communications, consumer cyclical and very little financials.  With all that apparent difference, is the extra volatility worth the extra performance and pullback potential?  You need to consider that; or at least I prefer to.

[acksurf]

Jul 3, 2021 9:44:24 GMT chang said:

I don't see the rationale for FSPTX. First, tech is 40-60% (or more) of most LCG funds already, including low cost OEFs (like VWUAX) and cheap indexes. Second, FSPTX has had 8 managers in 20 years, so there is no one brain or team responsible for its direction or record. (Current manager has < 1 year in the job and never managed a technology fund before.) If I want more tech I would just bias my portfolio toward growth with good, cheap and stable funds.

I agree.  At some point I'll pick a large cap growth fund that I like and aim to keep that as a long term hold.  At the moment I have Fido Blue Chip Growth.  I am trying to keep as simple a portfolio as possible.

[jongaltiii]

I don’t own FSPTX or an ETF… but if retiredat48 is using the former as a substitute for LCG funds or even as a sub for an SPY … that would be interesting. However, as I look at QQQ and even FSPTX - it’s clear that tech leads and has for quite some time. I’m convinced that it will continue to lead into the future as the best long term. How many people think that technology will be a laggard for any medium to long term period moving forward? Not I. But I’m more of a buy and hold. That’s what has me looking into QQQ and the like.

Re: “alpha” - very good point. Is owning tech as your biggest holding or a considerable tech tilt that much riskier? You could argue that many of us already do in various LCG and SC funds etc. while we are thinking that we are well diversified. Appreciate reading the responses. Very informative.