In the five years to September 2026, VGT returned 20.9% a year and QQQ returned 16.3%, dividends reinvested. Both lean heavily into technology, but they define it differently. VGT holds only companies in the information technology sector. QQQ holds the largest companies on the Nasdaq exchange, whatever they do.
For a representative saver about twenty years from retirement, investing in a taxable account: In this situation, VGT and QQQ come out about even. Neither their known costs nor their last five years change the plan's success rate enough to matter.
With only the known costs — the same market for both funds, differing by fees and dividend tax — the money lasted in 99.6% of 10,000 simulated futures with VGT and 99.5% with QQQ. Using each fund's own returns from October 2021 to September 2026 instead, the figures were 99.9% and 98.7%. Both funds were run against the identical sequence of market shocks.
Who counts as technology. Under the standard sector classification, Amazon is a consumer company and Alphabet and Meta are communication companies. VGT leaves them out; QQQ holds them. VGT also includes smaller technology companies that QQQ does not.
One sector is a narrow bet. A sector fund rises and falls with one industry. Both funds swing more than the broad market, and in a plan that draws money out, a fall early in retirement costs more than the average return suggests.
VGT tracks the MSCI US IMI Information Technology 25/50 Index — it holds US companies of every size that are classified in the information technology sector, with caps on the largest positions. QQQ tracks the Nasdaq-100 Index — it holds the 100 largest non-financial companies listed on the Nasdaq exchange.
VGT charges 0.09% a year and yields 0.38%; QQQ charges 0.18% and yields 0.42%.
Returns and volatility are measured from monthly returns with dividends reinvested over 60 months — one sample from one market, and weak evidence for telling two broad funds apart, which is why the known-cost result is reported first. Dividends are taxed at 15% in a taxable account by default, the qualified rate most households pay; the page also shows the 0% and 20% brackets. It is the only tax modeled. A 3.8% net investment income tax can also apply to dividends once modified adjusted gross income passes $200,000 ($250,000 joint); it is not included. Retirement spending is held at 70% of income in today's dollars, and contributions exclude any employer match.
They are different bets on technology: one on a sector, one on an exchange’s largest companies. The known costs between them are small; most of any gap comes from which did better recently.
Most investors hold a sector or Nasdaq-100 fund alongside a broad-market fund, not instead of one.