The nasdaq-100-etf" rel="tag">Invesco Nasdaq-100 ETF, better known as QQQM, has matched its larger sibling QQQ so closely that the two funds have become almost indistinguishable in performance. Over the past five years, QQQM posted average annual returns of 13.37% by net asset value, just ahead of QQQ’s 13.31%, while both funds are up more than 13% year to date and have gained over 43% in the past year.
That near tie matters because QQQM charges 0.15% in annual fees, compared with 0.18% for QQQ. On a $10,000 investment, that 0.03% gap amounts to about $3 in one year, a small difference that can still matter to investors who plan to hold for the long term.
The reason the two funds move so closely is simple: they track the same underlying stocks. The Invesco QQQ Trust is a Nasdaq-100 ETF, and QQQM is built from the same 102 holdings. QQQM’s biggest positions include Nvidia at 8.2% of the fund, Apple at 7.2%, Microsoft at 5.3%, Amazon at 5.1% and Alphabet Class A shares at 3.9%.
QQQM is the lower-cost option, while QQQ remains the more liquid fund. QQQM has about $82.9 billion in net assets and average trading volume of 4.1 million shares, compared with QQQ’s $440.3 billion in net assets and 59.8 million shares of average trading volume. The article says that less liquidity is not a disadvantage for most long-term investors, which leaves fees as the more important distinction between the two.
That is why the bigger question is no longer which fund tracks the Nasdaq-100 better. It is whether investors want to pay a little more for easier trading, or keep the cheaper fund that has delivered nearly the same result.
