The Invesco QQQ Trust (QQQ) is, by a long shot, the most popular ETF that tracks the NASDAQ-100 Index; however, Invesco has another fund in its innovation suite that offers the same access for a lower cost.
The Invesco NASDAQ 100 ETF (QQQM) is virtually identical to QQQ, affectionately dubbed the “Q mini,” according to ETF Database. The foundation of both ETFs is the Nasdaq 100, which provides exposure to the top 100 largest non-financial companies.
QQQ is used primarily by short-term traders, as evidenced by 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. The Q mini has a lower management fee at 15 basis points compared to QQQ’s expense ratio of 20 basis points, 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.
Many older funds like QQQ, which launched in 1999, were structured as trusts. Trusts, unlike many other equity ETFs, can’t lend out the stocks in their portfolio, and use the revenue to help offset fees. Trusts also can’t reinvest dividends, which many buy-and-hold savers prefer. The Q mini 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), in addition to QQQ.
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