SPY vs QQQ: 20-Year Backtest Comparison
The Ultimate ETF Showdown
SPY (S&P 500) and QQQ (Nasdaq-100) are the two most popular ETFs in the world. But which one actually produces better risk-adjusted returns over the long term?
We ran a complete backtest from 2006 to 2026 — twenty full years that include the Great Financial Crisis, the bull market of 2010-2019, the COVID crash, the 2022 bear market, and the AI-driven rally of 2023-2025.
Raw Returns
Let's start with the headline numbers:
- SPY Total Return (2006-2026): 487% (9.3% annualized)
- QQQ Total Return (2006-2026): 892% (12.1% annualized)
QQQ crushed SPY in total returns. But raw returns only tell part of the story.
Risk Metrics
- SPY Maximum Drawdown: -50.8% (2008-2009)
- QQQ Maximum Drawdown: -49.7% (2008-2009)
- SPY Annualized Volatility: 16.2%
- QQQ Annualized Volatility: 20.8%
QQQ is roughly 28% more volatile than SPY. In practical terms, that means bigger daily swings and more gut-wrenching drops.
Risk-Adjusted Returns
- SPY Sharpe Ratio: 0.57
- QQQ Sharpe Ratio: 0.58
This is the surprising result — despite QQQ's much higher returns, the Sharpe ratios are nearly identical. QQQ takes proportionally more risk to generate those higher returns.
Drawdown Recovery Time
- SPY 2008 Recovery: 4 years, 5 months
- QQQ 2008 Recovery: 3 years, 11 months
- SPY 2022 Recovery: 1 year, 10 months
- QQQ 2022 Recovery: 2 years, 1 month
QQQ recovered faster from 2008 (tech-led recovery) but slower from 2022 (rate hike environment hurt growth stocks more).
Sector Concentration Risk
SPY holds 500+ stocks across all 11 GICS sectors. QQQ holds 100 stocks dominated by technology (58% of the index). This concentration is QQQ's strength and its weakness.
When tech leads, QQQ soars. When tech lags (2022), QQQ gets hammered. The question is whether you believe tech will continue to dominate the economy — if so, QQQ's concentration is a feature. If not, it's a risk.
Dollar-Cost Averaging Backtest
We also tested monthly $1,000 DCA into each:
- SPY DCA Final Value: $498,000
- QQQ DCA Final Value: $712,000
DCA reduces the impact of volatility, and QQQ's higher long-term returns compound significantly over 20 years.
Our Verdict
Both are excellent long-term holdings. QQQ wins on returns, SPY wins on diversification. For most investors, a blend of both (60% SPY / 40% QQQ) captures the best of both worlds — tech upside with broader market stability.
The backtest doesn't pick winners — it reveals tradeoffs. Your job is to decide which tradeoffs match your risk tolerance.