The Invesco QQQ Trust (QQQ) is regularly lauded as a trader’s and long-term holder’s tool, but investors, short- and long-term alike, shouldn’t forget the Invesco NASDAQ 100 ETF (QQQM).
QQQM is based on the NASDAQ-100 Index (Index). The fund will invest at least 90% of its total assets in the securities that comprise the Index.
The Index includes securities of 100 of the largest domestic and international non-financial companies listed on Nasdaq. At a 0.15% expense ratio, the fund can also be used as a trader’s tool like its bigger brother, the QQQ ETF.
Why the Nasdaq 100? One only has to look at its performance over the last decade or so.
“For the past 12 years, growth stocks have ruled the roost on Wall Street,” a Motley Fool article explained. “This isn’t a huge surprise given that historically low lending rates and abundant access to capital have allowed fast-paced companies to borrow in order to hire, acquire, and innovate.”
“The striking outperformance of growth stocks has been readily on display via the Nasdaq 100 — an index comprised of the 100 largest nonfinancial companies listed on the Nasdaq exchange,” the article added. “Since the trough of the Great Recession on March 9, 2009, the benchmark S&P 500 has gained 556%, whereas the Nasdaq 100 has galloped higher by 1,350%!”
What’s Under the Hood?
There’s no shortage of big tech names in QQQM. Investors will see about a 40% allocation toward Apple, Google, Facebook, Amazon, and Microsoft.
What differentiates QQQ from QQQM? The latter could be more suitable for the buy-and-hold investor looking to capitalize off the growth factor.
To start the year, value was the leading factor before growth started to make a furious comeback. When looking at the performance of the S&P 500 Value and Nasdaq 100 indexes, it’s the latter that’s edged the former so far this year.
“Invesco designed the new QQQM to appeal to buy-and-hold investors, while traders and institutional buyers may prefer to stick with the original QQQ,” an ETF Database analysis said. “Let’s explain. For starters, the new fund is cheaper. QQQM (affectionately known as the Q mini) has a lower management fee. Shares of the Q mini are also a fraction of the value of QQQ, putting the mini within reach of small savers who might balk at QQQ’s price tag.”
For more news and information, visit the Innovative ETFs Channel.
