Investing

I Have $25K to Invest Right Now—Which ETF Gives Me the Best Return, QQQ or ARKK?

Vandita Jadeja

Published: February 23, 2025 10:50 am

Over the past few years, ETFs have become an integral part of every investor’s portfolio. It not only helps reduce risk but also ensures steady returns. Whether we are talking about the bullishness around tech companies or the high hopes with regard to interest rate cuts, Wall Street analysts are raising their price targets and some of your favorite stocks are inching closer to 52-week highs. Indeed, it isn’t easy to hit the bull’s eye when stock picking and ETFs are a safe route for many.

Investors who do not want to pick individual stocks and are worried about market volatility may want to consider investing in ETFs. Two of the biggest ETFs- Ark Innovation Fund (NYSEARCA:ARKK) and Invesco QQQ Trust (NASDAQ: QQQ) continue to attract attention and we help you decide which one to choose.

Key points in this article:

• These two ETFs are red hot and have always attracted investor interest.
• Both ETFs invest in diverse industries and have a record of generating solid returns.
• However, if you are looking for individual stocks with high upside potential, grab a free copy of our brand-new “The Next NVIDIA” report.

Ark Innovation ETF

The ARK Innovation ETF was started in 2014 and reported impressive growth during the pandemic. However, it has gone from a high of 152% to 8% this month. It has risen 48% in the past six months and 37% in the year. Cathie Wood is a growth investor who likes to pick stocks when they dip. However, it may not be possible for the fund to hit the highs it once achieved in 2021. This is when it generated maximum return for investors and the fund has been declining since then. It has recovered lately but I wouldn’t call the return impressive. 

The ETF has $6.71 billion in Assets Under Management (AUM). Investors need to understand the AUM when choosing an ETF. High investment inflows and high AUMs are a positive sign of the quality of the fund. The fund has experienced a significant drop in returns over the years. The return since inception is 228% and the 5-year returns stand at 14%. It has an expense ratio of 0.75%.

ARK Innovation has invested in tech stocks with Tesla (NASDAQ:TSLA) being its biggest investment. This is followed by Roku (NASDAQ:ROKU) and Coinbase Global Inc. (NASDAQ: COIN). While Tesla did generate significant returns in the past, many of the other holdings have weighed down the ETF. None of the top-moving stocks are a part of this ETF.

Invesco QQQ ETF

Launched in 1999, Invesco QQQ ETF has shown strong performance in the past and has $171.86 billion in AUM. This index follows the Nasdaq 100 and gives exposure to the top tech stocks. 

It has generated 26% returns in 1 year, 46.79% in 3 years, and 133% in five years. In the past ten years, the fund grew 459.14%. Stocks in the fund can be considered popular stocks, mainly tech companies that are driving the markets overall returns today. Its biggest holding lies in three tech companies, Apple Inc. (NASDAQ: AAPL), NVIDIA Corporation (NASDAQ: NVDA), and Microsoft Corporation (NASDAQ: MSFT). 60% of the fund’s investments lie in the technology sector, followed by 20% in the consumer discretionary.

The remaining 20% lies across different industries. Besides the top holdings, the ETF also holds companies like Costco Wholesale Corporation (NASDAQ: COST), Palantir Technologies Inc. (NYSE: PLTR), and Airbnb Inc (NASDAQ:ABNB) which are on a rally. In the short term, these stocks could continue to soar which will help the ETF generate steady returns.

Since the launch, the ETF has generated 443% higher returns than the S&P 500. What sets this fund apart is its exposure to the Magnificent Seven. This has remained a steady point over the years and has generated strong returns whenever the market rallied. It also has a low expense ratio of 0.20% making it an ideal choice for investors. Analysts see an upside for this ETF in 2025. 

The verdict

If you have $25K and are on the lookout for the best ETF, QQQ is a winner over ARKK for the short-term and the long-term. QQQ not only has a lower expense ratio but also has a better portfolio of stocks. While it is investing heavily in the tech sector, it is making most of the market upside.

Just the top three stocks, Nvidia, Apple, and Microsoft are driving majority gains in the market this year and these stocks are racing higher. All the top tech stocks are holdings in QQQ. None of these top companies are a part of ARKK. The overall return generated by QQQ is much higher than that generated by ARKK. Buy QQQ for short-term and long-term gains.