QQQ vs QQQM: Choosing the Best Nasdaq-100 ETF

The Invesco QQQ ETF (QQQ) and the Invesco Nasdaq-100 ETF (QQQM) are two popular funds that provide investors with exposure to the Nasdaq-100 Index, which includes 100 of the largest non-financial companies listed on the Nasdaq stock exchange.

While these two ETFs track the same index and hold the same stocks—such as Apple, Microsoft, and Amazon—there are some important distinctions that can influence which ETF might be better suited for different types of investors. 

We highlight the key similarities and differences between QQQ and QQQM, helping investors understand which one might best meet their investment goals. 

QQQ vs QQQM Overview

While both funds track the same index and are part of the same Invesco fund family, the older, larger QQQ and the new alternative QQQM do not share the same basic features and benefits. 

QQQ ETF

• Launched in 1999, QQQ is one of the oldest and most popular ETFs in the world, often referred to as the "Triple Qs." 
• It has a strong liquidity profile with high trading volume, making it a favored option for short-term traders and institutional investors. 
• QQQ holds all 100 companies in the Nasdaq-100, primarily focusing on tech-heavy companies but also including healthcare and consumer discretionary stocks. 

QQQM ETF

• Launched in 2020, QQQM is a newer alternative aimed at long-term, buy-and-hold retail investors. 
• Designed with a lower expense ratio than QQQ, QQQM provides the same exposure to the Nasdaq-100 but with slightly lower costs. 
• QQQM is part of Invesco’s suite of “Q” products, offering a cost-effective way to gain access to high-growth, large-cap Nasdaq companies. 

Key Differences Between QQQ and QQQM

The differences between these two Nasdaq 100 ETFs primarily lie in their respective expense ratios, liquidity, and share prices.

Data as of Nov. 1, 2024. Past performance is no guarantee of future results.

Tip: Use etf.com's ETF comparison tool to compare QQQ vs QQQM further.

Expense Ratios

• QQQ has an expense ratio of 0.20%, which is higher than QQQM’s 0.15%. 
• This slight difference can add up for long-term investors, making QQQM a more cost-effective choice for those looking to hold the ETF over many years. 

Liquidity and Trading Volume

• QQQ is highly liquid, with billions of dollars in trading volume each day. This high liquidity makes it an ideal choice for traders who need to enter and exit positions quickly. 
• QQQM has lower trading volume but still provides adequate liquidity for most retail investors, especially those with a long-term investment horizon. 

Share Price and Accessibility

• QQQ typically trades at a higher share price than QQQM, with a price difference due to their distinct inception dates and trading volumes. 
• QQQM’s lower share price can be more accessible for smaller or newer investors who may not have significant capital but want exposure to the Nasdaq-100.

Intended Investor Base

• QQQ is commonly used by institutional investors and day traders due to its high trading volume and liquidity. 
• QQQM, with its lower expense ratio, is positioned as a long-term investment option, targeting buy-and-hold retail investors looking for cost-efficient exposure to Nasdaq companies.

Similarities Between QQQ and QQQM 

The main similarity between the two Nasdaq-100 ETFs is the underlying benchmark index, which means the growth-oriented holdings are the same. 

Same Underlying Index

Both funds track the Nasdaq-100 Index, which includes 100 of the largest non-financial companies on the Nasdaq. This means both ETFs offer identical exposure to the same stocks and sectors. 

Growth-Oriented Holdings

Both ETFs are heavily concentrated in the technology sector, with major positions in companies such as Apple, Microsoft, Amazon, and Nvidia. This focus makes both QQQ and QQQM highly growth-oriented, with potential for high returns but also subject to higher volatility, particularly during market downturns. 

Sector Weighting

Due to their Nasdaq-100 focus, both ETFs are heavily weighted in technology and consumer discretionary sectors. Investors in either fund should be comfortable with a tech-heavy exposure, which can lead to rapid price movements based on sector performance and market sentiment. 

Low Yield

Both ETFs pay dividends, but the yield is relatively low compared to more diversified funds or income-focused ETFs. Investors primarily choose QQQ and QQQM for capital appreciation rather than income. 

QQQ vs QQQM: Who Should Invest?

Determining which Nasdaq-100 ETF to choose from boils down to how investors intend to use the fund: 

QQQ ETF

QQQ is a better choice for short-term traders and institutional investors who prioritize liquidity and fast, efficient trades. It’s also favored by those comfortable with paying a slightly higher expense ratio in exchange for its well-established market position and massive daily trading volume. 

Investors who plan to actively trade QQQ for market timing or to leverage short-term trends will benefit from the ETF’s high liquidity and narrow bid-ask spreads, reducing potential trading costs. 

QQQM ETF

QQQM is ideal for long-term, buy-and-hold investors looking for cost-effective exposure to the Nasdaq-100. With its lower expense ratio, QQQM is designed to help investors minimize costs over the long haul, which can be particularly beneficial for those planning to hold for years or even decades. 

QQQM’s lower share price also makes it a better option for smaller investors or those who want to buy fractional shares, helping to maximize diversification in their portfolios without a high upfront cost. 

Bottom Line: Choosing Between QQQ and QQQM

Both QQQ and QQQM offer similar exposure to the Nasdaq-100 Index, making them excellent choices for investors who want to participate in the growth of the U.S. tech sector. The decision ultimately comes down to an investor’s time horizon, trading style, and cost considerations. 

For active traders or those looking to capitalize on short-term trends, QQQ’s superior liquidity and extensive history make it the more practical option. For long-term investors aiming to minimize costs while accessing the same high-growth companies, QQQM’s lower expense ratio and price point provide a compelling advantage.  

Each ETF plays a valuable role in portfolios, giving investors two ways to participate in the Nasdaq-100 based on their investment goals.