Over the past 10, 15, and 20 years the Nasdaq-100 has beaten the S&P 500 by roughly 4 to 5 percentage points annualized, with dividends reinvested. The price of that outperformance is deeper drawdowns and heavier concentration in a handful of mega-cap tech names. For most long-term holders, the S&P 500 is the core; the Nasdaq-100 is a deliberate, sized tilt.
Key takeaways
- Through December 31, 2025, the Nasdaq-100 (via QQQ, total return) compounded at 19.4% annualized over 10 years versus 14.8% for the S&P 500 total return index; over 20 years it was 15.4% versus 10.9%.
- The outperformance is not free. In 2022 the Nasdaq-100 fell 32.97% in price terms against 19.44% for the S&P 500, and after the dot-com bust it took the index more than 15 years to reclaim its March 2000 high.
- Both indexes are historically concentrated: the top 10 holdings are about 46% of QQQ (August 2026) and about 38% of VOO (July 31, 2026), and eight of those names overlap.
- Tracking costs favor the S&P 500: VOO charges 0.03% versus 0.18% for QQQ (cut from 0.20% in December 2025) or 0.15% for QQQM.
- Owning both is a legitimate strategy, but size the Nasdaq-100 sleeve as a tech overweight you are consciously adding, not as diversification.
What you actually own in each index
The S&P 500, maintained by S&P Dow Jones Indices since 1957, holds roughly 500 large US companies across all 11 GICS sectors, weighted by float-adjusted market cap. Information technology alone is now around 37% of the index, a level not seen since the dot-com era, and the top 10 names run to about 38% of the total (VOO holdings data, July 31, 2026).
The Nasdaq-100, launched in 1985, holds the 100 largest non-financial companies listed on the Nasdaq exchange. Under Invesco's sector classification, more than 60% of QQQ sits in technology, with most of the rest in consumer discretionary and communication-services names like Amazon, Tesla, Netflix, and Alphabet. There is no energy exposure to speak of, no banks by rule, and almost no utilities or real estate.
Here is the part most comparisons undersell: these are not two different portfolios. NVIDIA, Apple, Microsoft, Amazon, Alphabet, Broadcom, and Meta dominate the top of both indexes. As mega-cap tech has swallowed the S&P 500, the two have converged; CME Group noted in March 2026 that their 12-month rolling correlation hit 0.98, an all-time high. Buying QQQ on top of an S&P 500 fund does not diversify you. It doubles your position in the same ten companies.
The returns, with dividends reinvested
Annualized total returns through December 31, 2025 (QQQ adjusted for dividends; S&P 500 total return index):
| Period ending 12/31/2025 | Nasdaq-100 (QQQ) | S&P 500 (total return) | Gap |
|---|---|---|---|
| 10 years | 19.4% | 14.8% | +4.6 pts |
| 15 years | 18.6% | 14.1% | +4.5 pts |
| 20 years | 15.4% | 10.9% | +4.5 pts |
Compounding makes that gap enormous. $100,000 in the Nasdaq-100 twenty years ago grew to roughly $1.74 million; the same money in the S&P 500 grew to about $790,000.
Recent calendar years show how the gap arrives in streaks rather than steadily:
| Year | Nasdaq-100 (price) | S&P 500 (price) | S&P 500 (total return) |
|---|---|---|---|
| 2020 | +47.6% | +16.3% | +18.4% |
| 2021 | +26.6% | +26.9% | +28.7% |
| 2022 | -32.97% | -19.44% | -18.1% |
| 2023 | +53.8% | +24.2% | +26.3% |
| 2024 | +24.9% | +23.3% | +25.0% |
| 2025 | +20.2% | +16.4% | +17.9% |
One honest caveat on window selection: every period in the first table starts after the dot-com wreckage. Measured from the March 2000 peak, the Nasdaq-100 spent over 15 years underwater in price terms; the index did not close above its March 27, 2000 high until November 2015. The 20-year numbers flatter the Nasdaq-100 because they begin in 2005, near the bottom of its lost decade. Growth-heavy indexes look inevitable only when you start the clock after the crash.
Risk: what the drawdowns look like
| Drawdown | Nasdaq-100 | S&P 500 |
|---|---|---|
| 2022 calendar year (price) | -32.97% | -19.44% |
| 2021 peak to 2022 trough | -35.6% | -25.4% |
| Dot-com bust (2000-2002, peak to trough) | -83% | -49% |
| Years to reclaim 2000 high (price) | 15+ | ~7 |
The 2022 episode is the useful modern stress test: rising rates compressed growth-stock multiples, and the Nasdaq-100 fell nearly 70% more than the S&P 500. If you are retired or close to it and drawing on the portfolio, sequence-of-returns math punishes that extra volatility hard. A 33% drawdown in the sleeve funding your withdrawals is a different problem at 55 than at 30.
Anyone who held QQQ through 2022 and kept buying was rewarded within two years. That is the historical pattern, not a law of nature. The dot-com row in that table is there because it actually happened to this exact index.
Concentration and valuation, stated plainly
The top 10 holdings are about 46% of QQQ and about 38% of VOO. By either measure, US large-cap index investors are running the most concentrated portfolios in the modern history of these benchmarks, and the concentration is thematically singular: nearly every one of those names is priced partly on AI capital spending continuing to pay off.
Valuation deserves the same bluntness. The Shiller CAPE ratio stands near 41 as of August 2026, the second-highest level on record after the 2000 peak. That is a statement about the S&P 500 itself; the Nasdaq-100 trades richer still. High starting valuations have historically meant lower forward 10-year returns, not guaranteed losses. Nobody should extrapolate 19% annualized from the last decade forward, and the same warning applies in softer form to the S&P 500's 14.8%.
The tracking ETFs and what they cost
| ETF | Index | Expense ratio | Dividend yield (Aug 2026) |
|---|---|---|---|
| VOO (Vanguard) | S&P 500 | 0.03% | 1.05% |
| SPY (State Street) | S&P 500 | 0.0945% | ~1.0% |
| QQQ (Invesco) | Nasdaq-100 | 0.18% | 0.43% |
| QQQM (Invesco) | Nasdaq-100 | 0.15% | ~0.6% |
QQQ's fee dropped from 0.20% to 0.18% on December 22, 2025, when shareholders approved converting the fund from a unit investment trust to an open-end ETF, a change that also lets it reinvest dividends internally and lend securities. For buy-and-hold money, QQQM remains the cheaper share class of the same index; QQQ's advantage is deep options and trading liquidity that long-term holders rarely need. We cover the S&P 500 side of the same tradeoff in SPY vs the S&P 500 funds and the Nasdaq-100 side in Vanguard's QQQ equivalent.
One point for taxable accounts: the Nasdaq-100's low dividend yield means less annual tax drag at the 23.8% top all-in rate on qualified dividends, since more of its return arrives as unrealized appreciation you control the timing of. It is a modest edge, not a reason to pick the index, but at seven-figure account sizes it is real money.
Which one, or both
For a long-term holder the honest framing is not "which index wins" but "how much concentrated tech risk do you want to hold on purpose."
The S&P 500 alone is the defensible default. It already gives you roughly 37% technology, every Nasdaq-100 mega cap at market weight, plus the banks, energy producers, healthcare, and industrials the Nasdaq-100 excludes. Membership rules do the pruning for you; see our S&P 500 hub for how companies enter and leave, including edge cases like MicroStrategy's exclusion.
Adding a Nasdaq-100 sleeve makes sense if you have a genuine conviction that mega-cap tech keeps outearning the broad market, a time horizon past 15 years, and the demonstrated stomach to hold through a 30 to 80 percent drawdown without selling. A common structure is 70 to 90% S&P 500 (or total market) with a 10 to 30% Nasdaq-100 tilt, rebalanced annually so the winner does not silently take over the portfolio.
The Nasdaq-100 alone as a core holding is the aggressive outlier. It has been the right call for 15 years, which is precisely why its valuation now assumes it stays the right call.
The 2022 drawdown, the 0.98 correlation, and a CAPE near 41 all point the same direction: whatever split you choose, choose it for reasons that survive a bad decade, write it down, and rebalance on schedule. The investors who actually captured the Nasdaq-100's 19% annualized decade were the ones who did nothing in 2022.
Frequently asked questions
How much has the Nasdaq-100 beaten the S&P 500 over the long term?
Over the past 10, 15, and 20 years the Nasdaq-100 has beaten the S&P 500 by roughly 4 to 5 percentage points annualized with dividends reinvested. Through December 31, 2025 it compounded at 19.4 percent over 10 years versus 14.8 percent for the S&P 500, and 15.4 percent versus 10.9 percent over 20 years.
Does adding QQQ to an S&P 500 fund diversify a portfolio?
No, buying QQQ on top of an S&P 500 fund does not diversify you, it doubles your position in the same ten companies. NVIDIA, Apple, Microsoft, Amazon, Alphabet, Broadcom, and Meta dominate the top of both indexes, and their 12-month rolling correlation hit 0.98 in March 2026. Size a Nasdaq-100 sleeve as a deliberate tech overweight, not diversification.
How bad were the Nasdaq-100's historical drawdowns?
In 2022 the Nasdaq-100 fell 32.97 percent in price terms against 19.44 percent for the S&P 500. During the dot-com bust it dropped about 83 percent peak to trough versus 49 percent for the S&P 500, and it took more than 15 years to reclaim its March 2000 high. That extra volatility punishes retirees drawing on the portfolio.
What do QQQ and its alternatives cost compared to S&P 500 ETFs?
VOO charges 0.03 percent for the S&P 500 versus 0.18 percent for QQQ, which was cut from 0.20 percent in December 2025, or 0.15 percent for QQQM. For buy-and-hold money, QQQM remains the cheaper share class of the same Nasdaq-100 index; QQQ's advantage is deep options and trading liquidity that long-term holders rarely need.
What is a common way to combine the S&P 500 and Nasdaq-100?
A common structure is 70 to 90 percent S&P 500 or total market with a 10 to 30 percent Nasdaq-100 tilt, rebalanced annually so the winner does not silently take over the portfolio. Adding the sleeve makes sense only with genuine conviction that mega-cap tech keeps outearning the market, a horizon past 15 years, and the stomach to hold through a deep drawdown.