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This overview will define QQQM and analyze its history, holdings, fees, and future investment potential.
What is QQQM?
The Invesco NASDAQ 100 ETF consists of securities of 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq.
QQQM has the same holdings and investment objective as the illustrious Invesco QQQ Trust (QQQ), one of the largest and most well-known funds on the market.
Invesco created QQQM, or QQQ-mini, to provide all the aspects of QQQ that investors love, but in a modern exchange-traded fund structure.
Big Tech stocks like Apple, Microsoft, Google, Amazon, and Meta (formerly Facebook) make up a significant portion of the fund.
QQQM: A Brief Background
The ETF boom had not yet occurred when Invesco created QQQ in 1999, so many providers structured their funds as trusts.
QQQ soaked up a ton of assets over the years and coming decades, ballooning to $285 billion in AUMby 2022.
However, it’s still structured as a trust today, which comes with some disadvantages for Invesco that are then passed onto the investor.
For example, Invesco cannot lend out shares of companies in the fund, which results in less revenue for Invesco and higher fees for the investor.
Instead of allowing a competitor to create a more efficient Nasdaq-100 fund to take QQQ’s market share, Invesco launched an ETF of its own to compete with QQQ.
Two decades after QQQ traded its first share, the Invesco NASDAQ 100 ETF was born.
It’s now on its way to becoming one of the best Nasdaq ETFs on the market.
Understanding QQQM
You might still be wondering why anyone would invest in QQQM vs QQQ.
Generally speaking, we believe that QQQM is a better option than QQQ for the buy-and-hold investor because it has lower fees, a lower share price, and its dividends can be easily reinvested.
QQQM charges an annual expense ratio of 0.15%, while QQQ charges 0.20%. Those five basis points will add up over the years.
Next, QQQM’s share price is about one-third the price of QQQ. This difference may allow you to put more of your capital to work if you’re using an exchange that doesn’t offer fractional shares.
Please note that the idea of being able to “buy more” of QQQM is a logical fallacy derived from unit bias. We encourage investors to think in terms of total ownership percentage.
For example, given the similar characteristics of each of these funds, $500 invested in QQQ will get you the same ownership percentage of total shares as $500 invested in QQQM.
Last up are re-investable dividends. QQQM’s structure as an ETF makes reinvesting dividends quick and easy, while QQQ’s structure as a trust limits its ability to do so.
We imagine that reinvesting dividends is the preferred strategy for the long-term investor, which gives QQQM another win over QQQ.
Liquidity is the area that QQQM comes up short relative to QQQ.
QQQ is one of the most traded funds on the market, so your buy or sell order will get filled at the price you execute your trade.
You may experience some slippage with QQQM, but the difference is negligible for the long-term investor. This difference in liquidity is only relevant if you’re trading these funds with high-frequency.
QQQM: Fund Details
Here’s a look at QQQM’s general details:
- 1-Year Trailing Performance: +6.98% as of February 28th, 2022
- Expense Ratio: 0.15%
- AUM: $3.53 billion
- Annual Dividend Yield: 0.44%
- 3 Month Avg. Volume: 900,000
- Number of Holdings: 101
- Issuer: Invesco
- Inception Date: 2020
In our estimation, the 0.15% expense ratio is the main selling point for QQQM.
QQQM Sector Allocation
The Nasdaq-100 Index consists mostly of technology stocks that trade at higher valuations.
However, there are more than just tech stocks in the Invesco NASDAQ 100 ETF. Here are the top sectors and their allocations in QQQM:
- Information Technology – 51%
- Consumer Services – 18%
- Consumer Discretionary – 16%
- Health Care – 6%
- Consumer Staples – 5%
- Industrials – 3%
- Utilities – 1%
Next, we’ll look at the top holdings in the Invesco NASDAQ 100 ETF.
QQQM Top Holdings
Below are the top holdings in QQQM:
- Apple (AAPL) 12.41%
- Microsoft (MSFT) 10.28%
- Alphabet (GOOG, GOOGL) 7.66%
- Amazon.com (AMZN) 7.14%
- NVIDIA (NVDA) 3.88%
- Tesla (TSLA) 3.74%
- Meta Platforms (FB) 3.42%
- Cisco Systems (CSCO) 1.87
- Pepsi Co (PEP) 1.75%
- Broadcom (AVGO) 1.84%
Big Tech makes up about 40% of the total assets in the ETF.
This is roughly double their weighting in S&P 500 funds like the Vanguard S&P 500 ETF (VOO).
QQQM: Frequently Asked Questions
What is the difference between QQQ and QQQM?
The differences between QQQ and QQQM include share price, fees, fund type, and liquidity. While both funds contain the same exact holdings, QQQM has a lower share price, lower fees, is structured as an ETF instead of a trust, but has lower levels of liquidity compared to QQQ.
What does QQQM stand for?
QQQM is the ticker symbol for the Invesco NASDAQ 100 ETF, which is also referred to as QQQ-mini given its similarities to the much larger Invesco QQQ Trust (QQQ).
What companies are in QQQM?
The top companies in QQQM include the likes of Apple, Microsoft, Amazon.com, Google, Nvidia, and plenty more technology stocks. The index that QQQM tracks consists mostly of tech stocks, but not exclusively. Companies like Costco and Pepsi are also in QQQM.
What is the expense ratio of QQQM?
The expense ratio of QQQM is 0.15% compared to 0.20% from its larger sibling QQQ. This means that if you have $10,000 invested in QQQM, you will pay the fund’s provider $15 per year.
Does QQQM pay dividends?
Yes, QQQM pays an annual dividend rate of 0.44%. This is a below-average dividend – and it should be. The types of companies in QQQM tend to be oriented towards growth, which means they would rather reinvest excess earnings into their growth initiatives instead of distributing it to their shareholders.
Bottom Line: QQQM
The QQQM ETF is an excellent investment vehicle for the buy-and-hold investor that wants diversified exposure to the top tech stocks.
Its inherent benefits as an ETF allows it to compete with QQQ – just as Invesco planned.
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 the QQQM ETF.
