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QQQ vs. QQQM comes down to fees, share price, liquidity, and fund type.
Let’s find out which tech-heavy fund is best for your portfolio.
QQQ vs. QQQM: Overview
The Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) follow the same Nasdaq-100 Index and invest in the same equities. So what’s the difference?
Here are the main differences between QQQ and QQQM:
- Management Fees (QQQ: 0.20%, QQQM: 0.15%)
- Share Prices ($330, $130)
- Liquidity (Higher, Lower)
- Dividends (Non Re-investable, Re-investible)
Generally speaking, these differences make QQQ better for the institutional investor and QQQM better for the buy-and-hold retail investor.
QQQ has far better liquidity, but this is less important for the long-term investor who is less concerned with bid-ask spreads compared to the high-frequency trader.
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QQQ vs. QQQM: The History
Invesco created QQQM – also known as QQQ-mini –- 21 years after it launched QQQ.
QQQ was structured as a trust when it originally launched in 1999, so it lacks some inherent benefits of being an exchange-traded fund.
Instead of allowing a competitor to take its market share, Invesco created its copycat of QQQ to offer Nasdaq-100 exposure in a more modern ETF structure.
And thus, QQQM was born.
Understanding QQQ vs. QQQM
Let’s stack up the differences between QQQ and QQQM side-by-side:
|Key Data Points:||QQQ||QQQM|
|AUM:||$178 Billion||$3.6 Billion|
|3 Mo. Avg. Volume:||73 Billion||900 Million|
These differences have varying degrees of importance for each investor, but generally speaking, we believe that QQQM is more suitable for the everyday investor.
Let’s take a closer look at the most relevant differences.
The share price of QQQM is roughly one-third the price of QQQ. As previously mentioned, this may be advantageous for investors using brokerages that don’t offer fractional shares.
For example, an investor looking to invest $300 wouldn’t be able to purchase any shares of QQQ, but they’d be able to buy two shares of QQQM.
QQQM’s expense ratio is 0.15%, while QQQ’s is 0.20%. It may seem insignificant, but a five basis point difference will add up over decades of compounding.
However, the superior liquidity provided by QQQ is worth every penny for the high-frequency trader.
You will experience less slippage on your trades when using QQQ compared to QQQM.
QQQ trades significantly greater volume than its mini counterpart, so there’s a high probability that your orders are filled at your desired price.
A look at the data shows a bid-ask spread of 0.00% for QQQ and 0.02% for QQQM.
QQQM’s structure as an ETF allows its dividends to be reinvested, whereas QQQ’s structure as a trust does not.
By definition, reinvesting dividends is the preferred strategy for the long-term investor.
This gives QQQM another leg-up on QQQ for the buy-and-hold type.
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QQQ & QQQM Top Holdings
Since they track the same index, we can look at the top holdings in QQQ and QQQM together:
- Apple (AAPL) 12.75%
- Microsoft (MSFT) 10.04%
- Alphabet (GOOG, GOOGL) 7.59%
- Amazon.com (AMZN) 7.19%
- Tesla (TSLA) 4.00%
- NVIDIA (NVDA) 3.86%
- Meta Platforms (FB) 3.39%
- Cisco Systems (CSCO) 1.86%
- Broadcom (AVGO) 1.84%
- Pepsi Co (PEP) 1.78%
About 18% of assets are in the Communication Services industry, 16% in Consumer Discretionary, 6% in Health Care, 5% in Consumer Staples, 3% in Industrials, and 1% in Utilities.
If you’re more interested in any of these sector ETFsthan you are in QQQ or QQQM, we will link to our analysis of them at the end of this article.
QQQ vs. QQQM: Frequently Asked Questions
Why is QQQM cheaper than QQQ?
QQQM is cheaper than QQQ because it is designed to attract long-term capital. Invesco is the fund provider for QQQM and QQQ, and it made a miniature version of its much larger QQQ fund to attract buy-and-hold investors that don’t need the liquidity provided by QQQ.
What is better than QQQ?
QQQ is one of the highest-rated funds based on performance and liquidity over the past few years. Some alternatives to QQQ include the Vanguard Information Technology ETF (VGT), the ProShares UltraPro QQQ (TQQQ), the ProShares UltraPro Short QQQ(SQQQ), and the Vanguard S&P 500 ETF (VOO).
Which is better: QQQ or VGT?
QQQ provides comprehensive exposure to the entire technology sector, whereas VGT focuses on just the “Information Technology” sub-industry of tech. This results in VGT missing some of the stocks you might expect to see in a “tech ETF,” such as Amazon.com (AMZN) or Alphabet (GOOG).
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Bottom Line: QQQ vs. QQQM
If you’re a long-term investor with an existing position in QQQ, we don’t think it’s necessary to sell your QQQ to buy into its more cost-effective counterpart.
But opting for QQQM moving forward is a strategy to consider.
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched QQQ and QQQM.