Key Points
The iShares Russell 2000 Growth ETF holds over 1,000 small-cap growth stocks, making it much more diversified than the QQQ's tech-heavy portfolio.
The iShares Russell 2000 Growth ETF's five-year drawdown was steeper than the QQQ's, and its recent returns have lagged the NASDAQ-100 ETF.
The iShares Russell 2000 Growth ETF charges a higher expense ratio, but both funds offer similar low yields.
The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) and the iShares Russell 2000 Growth ETF (NYSEMKT:IWO) differ most in market cap exposure, sector mix, and historical risk, with IWO charging a slightly higher fee for broader small-cap growth coverage.
Both QQQ and IWO are popular exchange-traded funds with distinct aims: QQQ tracks the NASDAQ-100, dominated by large-cap tech, while IWO targets small-cap U.S. companies with strong growth characteristics. This comparison breaks down key differences in cost, performance, risk, and portfolio makeup to help investors decide which may better suit specific goals.
Snapshot (cost & size)
| Metric | QQQ | IWO |
|---|---|---|
| Issuer | Invesco | IShares |
| Expense ratio | 0.18% | 0.24% |
| 1-yr return (as of 2026-02-04) | 15.5% | 11.6% |
| Dividend yield | 0.5% | 0.5% |
| Beta | 1.15 | 1.14 |
| AUM | $398.6 billion | $13.1 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
IWO charges a 0.24% expense ratio, making it modestly more expensive than QQQ's 0.18% fee, while both funds currently yield 0.5%, offering limited income potential.
Performance & risk comparison
| Metric | QQQ | IWO |
|---|---|---|
| Max drawdown (5 y) | -35.12% | -42.02% |
| Growth of $1,000 over 5 years | $1,828 | $1,016 |
What's inside
IWO tracks over 1,000 U.S. small-cap growth stocks, with the largest sector weights in industrials (25%), healthcare (23%), and technology (20%). Its top holdings—Bloom Energy Class A Corp (NYSE:BE), Fabrinet (NYSE:FN), and Credo Technology Group Holding Ltd (NASDAQ:CRDO)—each make up a small fraction of the portfolio, reflecting broad diversification. The fund has a long track record at 25.5 years and no notable structural quirks.
In contrast, QQQ is heavily concentrated in large-cap technology, with over half its assets in that sector and sizable positions in NVIDIA Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT). QQQ holds just over 100 names, resulting in greater concentration risk but also a sharper focus on industry leaders. Both funds follow straightforward, rules-based approaches without leverage or thematic overlays.
What this means for investors
These two ETFs cover two very different segments of the growth stock universe, and both may deserve a spot in a portfolio.
The QQQ is focused on the large-cap technology sector, tracking the Nasdaq 100. That means it includes all of the Magnificent Seven stocks as well as other tech high-flyers like Broadcom (NASDAQ:AVGO) and Palantir (NASDAQ:PLTR). With some $412 billion in assets under management, it is among the largest ETFs on the market. It has also been a stellar performer. Over the past five and 10-year periods, it has average annualized returns of 12% and 20%, respectively.
The IWO invests in the other end of the growth-stock spectrum. It includes the roughly 1,000 growth stocks within the Russell 2000 Index. Tech stocks only make up 20% of this portfolio. And the ETF, while more diversified, also includes more volatile smaller-cap growth stocks.
In addition, IWO’s long-term returns pale in comparison. If I was to choose one, it would be the QQQ hands down. But if you are looking for diversification with small-cap growth stocks, the IWO ETF may have a place alongside the QQQ.
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