QQQ and QQQM are extremely similar ETFs, and the choice between the two will depend on what kind of investor you are. Due to its higher liquidity and lower spreads, QQQ is a better choice for day traders or anyone else who wants to take a short-term position. On the other hand, if you’re looking to buy and hold for an extended period of time, QQQM is the superior pick.
In this article, we’ll tackle the topic of QQQ vs. QQQM and break down how these two closely related ETFs differ.
Key highlights:
- Both QQQ and QQQM are issued by Invesco and are extremely similar investment products.
- QQQM has a lower expense ratio than QQQ, but is also less liquid.
- QQQ has a much higher AUM and trading volume than QQQM, and it has been on the market for much longer.
- QQQ is the better choice for day-trading and short-term exposure, while “buy and hold” investors should go with QQQM.
| QQQ | QQQM | |
|---|---|---|
| Issuer | Invesco | Invesco |
| Inception year | 1999 | 2020 |
| Benchmark index | NASDAQ-100 | NASDAQ-100 |
| AUM | $316 billion | $37.2 billion |
| Expense ratio | 0.20% | 0.15% |
| Number of holdings | 102 | 102 |
| Annual dividend yield | 0.60% | 0.65% |
| Average trading volume | $30.3 billion | $1.8 billion |
| Average spread | Under 0.01% | 0.01% |
| Share price | $509.56 | $209.74 |
*Data as of November 29, 2024.
What do QQQ and QQQM have in common?
QQQ and QQQM are equal in many aspects. Both ETFs are issued by Invesco, and both are designed to track the performance of the NASDAQ-100 index. This index includes the 100 largest companies which are listed on the Nasdaq stock exchange, excluding companies in the financial sector.
As such, the holdings of QQQ and QQQM are next to identical. Here are the top 10 stocks held by QQQ and QQQM at the time of writing this article, along with their respective portfolio weights:
QQQ vs. QQQM – Key differences
When comparing QQQ vs QQQM, one of the first thing you’ll notice is that the two ETFs have different expense ratios. Although both have fairly competitive fees, QQQM’s 0.15% expense ratio is more efficient than QQQ’s 0.20% expense ratio. Combined with the QQQM’s slightly higher annual dividend yield, this makes QQQM more suitable for buy and hold investors.
Another difference between the two ETFs is the price per share. QQQM has a lower share price, which makes it more accessible to those who are looking to invest smaller amounts.
The QQQ ETF made its debut on the market in March 1999, while the QQQM ETF is much more recent, having launched in October 2020. The two products have a different structure, as QQQ launched as a unit trust.
Meanwhile, QQQM has a more flexible ETF structure, which allows it to reinvest dividends at the fund level and engage in securities lending (this is one of the reasons why it can offer a lower expense ratio).
However, there are certain categories where QQQ edges out QQQM. It has significantly higher trading volumes, as well as a lower spread. This makes it a better fit for those that want to day trade or enter a short-term position.
The bottom line
If you are looking for exposure to the NASDAQ-100, the bottom line of the QQQ vs. QQQM comparison is fairly straightforward. QQQ is the way to go if you want to day trade or just get short-term exposure, while QQQM is the better option if you want to buy and hold.
If you’re interested in investing in ETFs and getting diversified exposure to the U.S. stock market, make sure to also check out our VTI vs. VOO comparison.
