QQQ vs. VOO in the long term. Which one is better ceteris paribus?

1. Look at the charts of QQQ and VOO. Obviously QQQ beats VOO.

2. Expense ratio: VOO is 0.03% and QQQ is 0.2%

Assuming QQQ will keep beating VOO within the next 30 years, does it make sense to pay 0.2% to QQQ. How will the compounding interest work out?

If I invest \$1,000 in VOO and QQQ, 30 years from now, will my VOO account be larger than QQQ account? (of course assuming QQQ keeps beating VOO just like it did, and eating out 0.2% just like it did)

• It's a bit silly to say that QQQ is outperforming VOO and then ask if QQQ keeps beating VOO for 30 years, will a \$1,00 invested in VOO outperform a \$1,000 QQQ investment? Also, expenses are accounted for before the NAV is calculated so it doesn't matter (academically) what the expense ratio of an ETF is as long as it is outperforming. – Bob Baerker Aug 10 '20 at 23:30

QQQ has killed VOO in the past 10 years and there is no reason to believe that is going to change. VOO does better on dividends but at the end of the day, QQQ will make you more money anyway.

• Dividends do not produce total return. If QQQ is outperforming VOO then it is because QQQ's components are outperforming those of VOO. – Bob Baerker Aug 15 '20 at 19:04

Assuming QQQ will keep beating VOO within the next 30 years, does it make sense to pay 0.2% to QQQ.

Without knowing the numbers there is no way to know which is the better investment. There is overlap between the investments, but one is broader than the other. The difference in expenses may not hurt QQQ, but then again VOO may be good enough to make the expenses important over the next 30 years.

How will the compounding interest work out?

There is no compound interest. You are investing in fund that invests in stocks. Some of the companies pay dividends, but they don't have to. Those dividends could go up or down. The prices of the shares could go up or down. Over time they should go up, but there is no compounding.

• It might be possible that the OP was referring to the compounding of dividends reinvested. – Bob Baerker Aug 15 '20 at 19:02