HYI vs QQQ
HYI vs QQQ
Western Asset High Yield Defined Opportunity Fund Inc. vs Invesco QQQ Trust, Series 1
Quick Verdict
QQQ has a lower expense ratio. QQQ delivered stronger 1-year returns. HYI offers more diversification with 191 holdings.
Side-by-Side Comparison
| Metric | HYI | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.96% | 0.18% | |
| AUM | $146M | $455.8B | |
| Dividend Yield | 9.89% | 0.41% | |
| Holdings | 258 | 108 | |
| YTD Return | +0.25% | +18.20% | |
| 1Y Return | -2.58% | +27.63% | |
| 3Y Return (annualized) | +6.17% | +25.54% | |
| 5Y Return (annualized) | +1.37% | +15.12% | |
| Volatility (annualized) | 12.4% | 30.6% | |
| Max Drawdown | -48.5% | -83.0% | |
| Fund Family | Franklin Templeton Investments (US) | Invesco (US) | |
| Category | Fixed Income | Equity | |
| Inception | Oct 27, 2010 | Mar 10, 1999 |
HYI vs QQQ Performance
Western Asset High Yield Defined Opportunity Fund Inc. (HYI) is a ETF from Franklin Templeton Investments (US) and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year HYI returned -2.58% while QQQ returned +27.63%. Year to date, HYI is up 0.25% versus a gain of 18.20% for QQQ.
Over three years, HYI compounded at +6.17% per year against +25.54% for QQQ; over five years the annualized figures are +1.37% and +15.12% respectively. Across the full 16-year window we track, QQQ has the edge at +13.11% annualized vs -0.86%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
QQQ has been the more volatile fund, with annualized monthly volatility of 30.6% compared with 12.4% for HYI. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -48.5% for HYI and -83.0% for QQQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.55. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
HYI charges 0.96% per year while QQQ charges 0.18%. On a $10,000 position that is $96 vs $18 annually, a gap of $78 per year that compounds over a long holding period. On income, HYI currently yields 9.89% against 0.41% for QQQ.
Holdings Overlap
HYI and QQQ share 0 holdings out of 294 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, HYI or QQQ?
HYI has an expense ratio of 0.96% while QQQ charges 0.18%. QQQ is the cheaper option. On a $10,000 investment, that is $78 per year of difference.
Which performed better, HYI or QQQ?
Over the past year HYI returned -2.58% vs +27.63% for QQQ, so QQQ leads on 1-year performance. Over the longest common window we track (16 years), HYI annualized -0.86% vs +13.11% for QQQ. Past performance does not guarantee future results.
Which is riskier, HYI or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 12.4% for HYI. Worst drawdown: HYI -48.5% vs QQQ -83.0%.
Should I hold both HYI and QQQ?
HYI and QQQ have a monthly-return correlation of 0.55, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between HYI and QQQ?
HYI and QQQ share 0 common holdings with a 0.0% weight overlap. Combined, they hold 294 unique securities.
Which pays a higher dividend, HYI or QQQ?
HYI yields 9.89% while QQQ yields 0.41%, so HYI currently pays the higher dividend yield.
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