The Invesco QQQ Trust (QQQ) isn’t just one of the largest ETFs available to investors. QQQ has long been the gold standard for accessing the Nasdaq-100 Index.
QQQ is large, liquid, and provides ample exposure to venerable growth companies, including Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN), among many others. It’s also reasonably priced with an annual fee of 20 basis points.
Long-term investors, however, may want to look to another fund in Invesco’s innovation suite instead: the Invesco NASDAQ 100 ETF (QQQM). QQQM, affectionately dubbed the “Q mini,” offers the same access to the Nasdaq-100 Index for a lower cost, charging just 15 basis points.
QQQ is a better fit for short-term traders due to the significant average daily trading volumes. QQQ has penny-wide spreads and can be a nice tool for those looking to quickly establish a position in U.S. equity markets, according to ETF Database.
On the other hand, the Q mini appeals more to buy-and-hold investors. Offering the exact same exposure as QQQ, QQQM has a lower management fee, which adds up for long-term investors, according to ETF Database.
Shares of the Q mini are also a fraction of the value of QQQ, putting QQQM within reach of smaller investors.
Another key difference is the structure of the fund. Many older funds, including QQQ, which launched in 1999, were structured as trusts. Trusts, unlike newer equity ETFs, can’t lend out the stocks in their portfolios and use the revenue to help offset fees. Trusts also can’t reinvest dividends, which many buy-and-hold savers prefer. The Q mini, however, can do both, according to ETF Database.
For the buy-and-hold saver, QQQM is likely the more appealing option due to its lower fees, smaller share price, and reinvested dividends. However, big institutional investors and high-speed firms will likely stick with QQQ, at least for now; the larger size makes QQQ cheaper to trade, and the QQQ has a sizable lead when it comes to liquidity.
Other products in Invesco’s innovation suite include the Invesco ESG NASDAQ 100 ETF (QQMG), the Invesco NASDAQ Next Gen 100 ETF (QQQJ), and the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG), which all offer exposure to different facets of the constituents in the Nasdaq.
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