Tech & Growth ETF Alternatives to the Invesco QQQ Trust (QQQ)

QQQ alternatives: growth stocks

For investors looking to maintain exposure to large-cap U.S. growth stocks but with a bit more precision, my go-to QQQ alternative is the Vanguard Mega Cap Growth ETF

.

It tracks the CRSP US Mega Cap Growth Index, holding 69 stocks selected. The portfolio has strong fundamentals, with an average earnings growth rate of 30.6% and a return on equity of 40.5%.

There’s meaningful overlap between the two funds. MGK and QQQ share 41 holdings, with 59% of MGK’s weight also found in QQQ, and 41% of QQQ’s weight present in MGK. Top positions are nearly identical, featuring all of the Magnificent Seven names.

But MGK’s broader eligibility, without QQQ’s Nasdaq-only and no financials restriction means it also includes NYSE-listed growth giants like Eli Lilly, S&P Global, and Visa Inc.

Another point in MGK’s favor is its significantly lower expense ratio. QQQ charges 0.20%, which isn’t unreasonable, but MGK comes in at just 0.07% in classic Vanguard fashion. MGK is also highly tax efficient. It offers a 0.38% 30-day SEC yield.

QQQ alternatives: tech stocks

One of the most common complaints I hear from investors looking for a true tech sector alternative to QQQ is the lack of broad coverage, and they’re right. Most traditional tech ETFs follow the GICS sector classifications, which exclude several of the biggest names people associate with technology.

Under this system, Amazon and Tesla are classified as consumer discretionary, while Alphabet, Meta Platforms, and Netflix fall under communication services. So, when you buy a typical tech sector ETF, you're really just getting Microsoft, Apple, Nvidia, and a few others.

The iShares Expanded Tech Sector ETF

addresses this issue. It tracks the S&P North American Expanded Technology Sector Index, which includes a broader set of 280 companies. Its top holdings include Nvidia, Apple, Microsoft, Meta, Alphabet (both share classes), and Netflix. It doesn’t include Amazon or Tesla, but no ETF is perfect.

Another feature that sets IGM apart is its North American focus. That gives you exposure to a few non-U.S. names, including Shopify, a Canadian ecommerce firm that’s often excluded from other ETFs because it's domiciled in Canada, even though it's dual listed and widely followed by U.S. investors.

The downside is cost. IGM charges a 0.41% expense ratio, which is higher than QQQ’s 0.20%. Personally, I think iShares could make IGM far more competitive by dropping the fee closer to 0.35%, which would bring it in line with State Street’s industry-specific ETFs.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.