What's the Better Long-Term Investment: The Nasdaq-100 or the Top S&P 500 Growth Stocks?

If you're investing in the long term, growth stocks can help you maximize your gains. They can offer superior gains to dividend stocks, which often prioritize making recurring payments over growing their operations at high rates.

The downside with growth stocks is that they can experience a lot of volatility from one year to the next. But if you're investing for not only years but decades, it can make a lot of sense to focus on growth stocks since over the long haul they're likely to outperform dividend stocks.

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Rather than picking individual growth stocks, you may want to put money into an exchange-traded fund (ETF), which gives you broad exposure to many of them through just a single investment. Two popular options include the Invesco QQQ Trust (NASDAQ: QQQ), which tracks the Nasdaq-100 index, and the Vanguard S&P 500 Growth Index Fund ETF (NYSEMKT: VOOG) which focuses on growth companies within the S&P 500.

Which one is the better option for your portfolio today? Let's dive in and find out.

Over the past decade, the Invesco fund has delivered superior returns

Both of these funds have made for good, market-beating investments over the past 10 years. But by focusing on the Nasdaq-100, which includes the top non-financial stocks on the exchange, the Invesco fund has been the far better investment during that stretch.

QQQ Total Return Level data by YCharts.

There are many similarities between the two funds. Apple, Nvidia, and Microsoft make up the top three positions in both ETFs. However, in the Invesco fund they account for about 26% of the total holdings, versus 35% of the Vanguard fund. While the Invesco fund focuses on the Nasdaq 100, the Vanguard S&P 500 Growth Index Fund ETF has more than 230 stocks in total, making it a much more diverse option.

A potential slowdown in the markets could hurt both ETFs

The stock market has been red hot over the past couple of years, and the risk is that future returns may be limited. That can make both of these funds vulnerable to declines in the near term.

The Vanguard fund, due to its broader mix of stocks, may be less susceptible to a decline. But with more exposure to heavyweights such as Apple, Nvidia, and Microsoft, should those stocks struggle the most due to their high valuations, then the Invesco fund, which has less exposure to them, may be less vulnerable.

When looking at the long run, both of these funds can make for promising long-term investments regardless of short-term trends in the market. There is a lot of overlap between them. It may ultimately come down to how diverse an investment you are seeking and the exposure you want to tech.

Within the Vanguard fund, just under 50% of the holdings are in tech stocks, versus around 60% in the Invesco ETF. Tech stocks can sometimes generate far superior returns, but they can also be susceptible to big sell-offs, especially when their valuations soar to unsustainable levels.

For the long run, it's hard to go wrong with the Invesco ETF

The Invesco fund isn't as diverse as the Vanguard fund, which can be a disadvantage in the short run. But over the long haul, it's likely to outperform, because focusing on a narrower range of growth stocks can set it up for greater returns. Too much diversification can limit the returns an ETF can achieve.

While you don't necessarily want exposure to just a handful of stocks, which can increase your overall risk, I think the Invesco fund strikes a good balance. Its largest holding (Apple) only accounts for 9% of its entire portfolio. As long as you're OK with short-term volatility, the Invesco fund looks like it may remain the better investment option for the long term.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.