{"id":442,"date":"2022-02-19T11:48:03","date_gmt":"2022-02-19T11:48:03","guid":{"rendered":"https:\/\/investorimpactlab.com\/?p=442"},"modified":"2022-02-21T05:02:12","modified_gmt":"2022-02-21T05:02:12","slug":"qqq-vs-qqqm","status":"publish","type":"post","link":"https:\/\/investorimpactlab.com\/qqq-vs-qqqm\/","title":{"rendered":"QQQ vs. QQQM &#8211; Is QQQ Still a Good Purchase?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Recently a strange thing caught my attention. Many people are unaware of the two famous siblings in the stock market &#8211; QQQM and QQQ. Therefore, I decided that it\u2019s important that these two brothers must be introduced. <\/p>\n\n\n\n<p>QQQM and QQQ are among the <strong>popular exchange-traded funds<\/strong>. They provide great potential to retail investors to <strong>increase their portfolio value<\/strong>. QQQ\u2019s past performance has been exceptional so far. It invests in <strong>U.S mutual funds <\/strong>and provides a <strong>good diversification<\/strong> to the portfolio.<\/p>\n\n\n\n<p>QQQM, on the other hand, is <strong>younger than QQQ<\/strong>. Despite its recent inception, the fund has managed to climb up in the list of top ETFs. It provides a relatively<strong> lower expense ratio<\/strong>. It gives you a <strong>wider diversification potential<\/strong>.<\/p>\n\n\n\n<p>Also, both growth stocks are from Invesco; therefore, you can trust the excellent service.<\/p>\n\n\n\n<p>Moreover, I have done complete research on both these ETFs to make you aware of how incredible they can be for you. So, try not to miss any section of the article.<\/p>\n\n\n\n<h2 id=\"key-takeaways\">Key Takeaways<\/h2>\n\n\n\n<ul><li><strong>Invesco manages QQQM and QQQ<\/strong>.<\/li><li>Both QQQM and QQQ offer low expense ratios,<strong> 0.20%,<\/strong> and <strong>0.15%<\/strong>, respectively.<\/li><li>Both track the <strong>Nasdaq 100 index<\/strong>.<\/li><li>The <strong>structure of QQQ is UIT<\/strong> because it strives to precisely duplicate the underlying securities by owning every security.<\/li><li>The <strong>structure of QQQM is an ETF<\/strong>.<\/li><li>QQQM provides a proportional stake in the pool of <strong>stocks, bonds, and other assets<\/strong>.<\/li><\/ul>\n\n\n\n\n\n<h2 id=\"qqq-vs-qqqm-are-they-different\">QQQ vs QQQM &#8211; Are They Different?<\/h2>\n\n\n\n<h3 id=\"similarities\">Similarities<\/h3>\n\n\n\n<p>Both QQQ and QQQM are extremely similar to each other. So, there is no sense of competition between them. They both provide <strong>growth potential for your portfolio<\/strong>. You can add them together or even use only one of them according to your investment needs.<\/p>\n\n\n\n<p>Besides that, these two ETFs follow the same index &#8211; <a href=\"https:\/\/www.nasdaq.com\/nasdaq-100\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Nasdaq 100<\/strong><\/a>. They invest in all the stocks indexed by Nasdaq 100. Moreover, they both <strong>have a higher risk than<\/strong> most other ETFs.<\/p>\n\n\n\n<h3 id=\"differences\">Differences<\/h3>\n\n\n\n<p>However, I would say that if you want to lessen your risks, go for QQQM instead of QQQ. This is the only difference you will ever notice from all the data.<strong> QQQM offers a relatively low expense<\/strong> ratio of <strong>0.15%<\/strong> compared to <strong>0.20%<\/strong> of QQQ. It may sound like a small difference, but it can create a big gap during <strong>long-term investments<\/strong>.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img loading=\"lazy\" width=\"1024\" height=\"406\" src=\"https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM-1024x406.png\" alt=\"QQQ vs QQQM: portfoliovisualizer.com\" class=\"wp-image-444\" srcset=\"https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM-1024x406.png 1024w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM-300x119.png 300w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM-768x304.png 768w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM-1536x608.png 1536w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.25-PM.png 1818w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>QQQ vs QQQM: portfoliovisualizer.com<\/figcaption><\/figure><\/div>\n\n\n\n<p>Moreover, there is another slight difference between the dividend yield they provide. QQQM is behind QQQ in this sector. QQQM offers a <strong>0.45%<\/strong> dividend yield, whereas QQQ offers <strong>0.47%<\/strong>.<\/p>\n\n\n\n<p>This is definitely not a big difference, but it\u2019s my duty to inform you. If you consider this factor as well, then this difference might help you, right?<\/p>\n\n\n\n<h2 id=\"qqq-vs-qqqm-composition\">QQQ vs QQQM &#8211; Composition<\/h2>\n\n\n\n<h3 id=\"qqq\">QQQ<\/h3>\n\n\n\n<p>QQQ is one of the most popular ETFs, with a lot of money flowing through it. Its <strong>enormous daily trading volume indicates that it is widely used as a short-term trading vehicle<\/strong> rather than a long-term investment vehicle.<\/p>\n\n\n\n<p>Moreover, QQQ has <strong>high liquidity<\/strong>, making frequent trading inexpensive. That said, it doesn\u2019t rule out its usefulness in a tactical exposure to the technology sector for <strong>buy and holds investors.<\/strong><\/p>\n\n\n\n<h3 id=\"qqqm\">QQQM<\/h3>\n\n\n\n<p>QQQM is known as the younger sibling of QQQ, as it launched in October 2020. It is slightly <strong>cheaper than QQQ<\/strong> and pretty identical to QQQ. Like its big brother, it also tracks the <strong>Nasdaq-100<\/strong>.<\/p>\n\n\n\n<p>However, it is <strong>more efficient in terms of fees, share price, and also it reinvests dividends<\/strong>. These things make it more attractive when staged along with QQQ.<\/p>\n\n\n\n<p>Moreover, the differences, even the slight ones, can be observed clearly in the composition table below:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><\/td><td><strong>QQQ<\/strong><\/td><td><strong>QQQM<\/strong><\/td><\/tr><tr><td><strong>Issuer<\/strong><\/td><td>Invesco<\/td><td>Invesco<\/td><\/tr><tr><td><strong>Inception Date<\/strong><\/td><td>1999-03-10<\/td><td>2020-10-13<\/td><\/tr><tr><td><strong>Category<\/strong><\/td><td>Large Cap Growth Equities<\/td><td>Large Cap Growth Equities<\/td><\/tr><tr><td><strong>Expense Ratio<\/strong><\/td><td>0.20%<\/td><td>0.15%<\/td><\/tr><tr><td><strong>AUM<\/strong><\/td><td>$188B<\/td><td>$3.7B<\/td><\/tr><tr><td><strong>Total Assets<\/strong><\/td><td>215.24B<\/td><td>$3.86B<\/td><\/tr><tr><td><strong>Average Daily $ Volume<\/strong><\/td><td>$25.56B<\/td><td>$129.71M<\/td><\/tr><tr><td><strong>Underlying Index<\/strong><\/td><td>NASDAQ-100 Index<\/td><td>NASDAQ-100 Index<\/td><\/tr><tr><td><strong>Number of Holdings<\/strong><\/td><td>103<\/td><td>104<\/td><\/tr><tr><td><strong>Top 10 Holding Percentage<\/strong><\/td><td>52.57%<\/td><td>52.59%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Thus, I hope you have an idea about the differences between QQQM and QQQ. In most cases, both are almost similar. The few noticeable differences are their <strong>expense ratio, AUM, net assets, and average daily $ volume<\/strong>.<\/p>\n\n\n\n<h3 id=\"holdings\">Holdings<\/h3>\n\n\n\n<p>The number of holdings of QQQM and QQQ has a slight difference only. QQQ has <strong>103<\/strong> holdings, whereas QQQM got one extra, <strong>104<\/strong>. This is not a huge difference that could harm the portfolio if you choose QQQ over QQQM.<\/p>\n\n\n\n<h3 id=\"allocations\">Allocations<\/h3>\n\n\n\n<p>But, what matters is top holdings, right? So here are the top holdings of QQQM and QQQ.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th scope=\"col\"><\/th><th scope=\"col\"><strong>QQQ<\/strong><\/th><th scope=\"col\"><strong>QQQM<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Apple Inc.<\/strong><\/td><td>12.57%<\/td><td>12.58%<\/td><\/tr><tr><td><strong>Microsoft Corporation&nbsp;<\/strong><\/td><td>10.09%<\/td><td>10.09%<\/td><\/tr><tr><td><strong>Amazon.com, Inc.<\/strong><\/td><td>7.15%<\/td><td>7.15%<\/td><\/tr><tr><td><strong>Tesla Inc.<\/strong><\/td><td>4.07%<\/td><td>4.07%<\/td><\/tr><tr><td><strong>Alphabet Inc. Class C<\/strong><\/td><td>3.94%<\/td><td>3.94%<\/td><\/tr><tr><td><strong>NVIDIA Corporation<\/strong><\/td><td>3.88%<\/td><td>3.88%<\/td><\/tr><tr><td><strong>Alphabet Inc. Class A<\/strong><\/td><td>3.74%<\/td><td>3.74%<\/td><\/tr><tr><td><strong>Meta Platforms Inc. Class A<\/strong><\/td><td>3.56%<\/td><td>3.56%<\/td><\/tr><tr><td><strong>Broadcom Inc.<\/strong><\/td><td>1.79%<\/td><td>1.79%<\/td><\/tr><tr><td><strong>Adobe Inc.<\/strong><\/td><td>1.79%<\/td><td>1.79%<\/td><\/tr><tr><td><strong>Total Top 10 Weighting&nbsp;<\/strong><\/td><td>52.57%<\/td><td>52.59%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>This table clearly shows that even the top 10 holdings of both QQQM and QQQ are identical. The weightage is also quite similar. Therefore, one can expect a good level of diversification by choosing either of these ETFs.<\/p>\n\n\n\n<h3 id=\"diversification\">Diversification<\/h3>\n\n\n\n<p>Both QQQM and QQQ ETF are <strong>ideal for frequent bullish traders<\/strong> due to their <a href=\"https:\/\/site.financialmodelingprep.com\/education\/financial-ratios\/liquidity-ratios\/what-is-financial-liquidity-and-why-is-financial-liquidity-important#:~:text=Liquidity%20is%20the%20ability%20to,short%20term%20liabilities%20and%20debts.\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>liquidity<\/strong><\/a><strong> <\/strong>and <strong>superior performance<\/strong> in bull markets. Active traders, on the other hand, should be aware that when QQQ goes down, it can lose more than the S&amp;P 500.<\/p>\n\n\n\n<h4 id=\"qqq\">QQQ<\/h4>\n\n\n\n<p>Moreover, with enough diversification to avoid the hazards of betting on one firm, the QQQ ETF gives buy-and-hold investors a cheap and long-term growth opportunity. At the same time, long-term investors choosing QQQ must confront <strong>sector risk, overvaluation, and the absence of small caps.<\/strong><\/p>\n\n\n\n<h4 id=\"qqqm\">QQQM<\/h4>\n\n\n\n<p>This is where QQQM comes to rescue the long-term investors. With <strong>low volatility<\/strong>, it becomes a perfect choice. It also provides the same diversification opportunity as QQQ as the index they follow is the same &#8211; Nasdaq exchange.<\/p>\n\n\n\n<h2 id=\"qqq-vs-qqqm-past-performance\">QQQ vs QQQM &#8211; Past Performance<\/h2>\n\n\n\n<p>To compare the performance of both QQQ and QQQM, I have considered QQQM\u2019s inception date as the starting point. As a result, since October 14, 2020, QQQ has earned an annualized return of <strong>22.36 percent<\/strong>, which is roughly equal to the total return of QQQM, <strong>22.31 percent.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"1024\" height=\"509\" src=\"https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM-1024x509.png\" alt=\"QQQ vs QQQM: Performance Summary, Source: portfoliovisualizer.com\" class=\"wp-image-445\" srcset=\"https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM-1024x509.png 1024w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM-300x149.png 300w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM-768x382.png 768w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM-1536x764.png 1536w, https:\/\/investorimpactlab.com\/wp-content\/uploads\/2022\/02\/Screen-Shot-2022-02-19-at-7.40.39-PM.png 1838w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>QQQ vs QQQM: Performance Summary, Source: portfoliovisualizer.com<\/figcaption><\/figure>\n\n\n\n<h3 id=\"expense-ratio\">Expense Ratio<\/h3>\n\n\n\n<p>QQQ is behind QQQM in this department. This difference has helped make QQQ an attractive buy for many investors. The expense ratio of QQQ is <strong>0.20%<\/strong>, compared to <strong>0.15%<\/strong> of QQQM. This difference becomes a great deal in long-term investments.<\/p>\n\n\n\n<p>If you invest <strong>$10,000 <\/strong>in QQQ, the fee you will be paying is<strong> $20<\/strong>. On the contrary, investing the same amount in QQQM means paying a lower fee of <strong>$15<\/strong>. You may neglect the difference but remember that every penny matters when it comes to investments.<\/p>\n\n\n\n<h3 id=\"dividend-yield\">Dividend Yield<\/h3>\n\n\n\n<p>If you consider dividend yields the main factor in differentiating between the ETFs, QQQ can provide a little extra income. The dividend yield of QQQ is <strong>0.47%<\/strong>, just <strong>0.02 percent<\/strong> more than that of QQQM.<\/p>\n\n\n\n<h3 id=\"assets-under-management\">Assets Under Management<\/h3>\n\n\n\n<p>QQQ is the clear winner here. It\u2019s because the ETF is present in the market for a longer duration than QQQM. But, QQQM has also managed to join the billion-dollar group in two years. QQQ is managing assets worth <strong>$188 billion<\/strong>, and QQQM is managing <strong>$3.7 billion<\/strong> of assets as of today.<\/p>\n\n\n\n<h3 id=\"tax-efficiency\">Tax Efficiency<\/h3>\n\n\n\n<p>In my overall evaluation, I have always found that the ETFs of Invesco are generally <strong>tax-efficient<\/strong>. ETFs can be used as a <strong>tax-efficient financial instrument for investors <\/strong>who want to defer capital gains until the time of sale. QQQ and QQQM are no exception; both have a tax-efficient structure. So, my tax advice is to choose any of them without worrying about tax.<\/p>\n\n\n\n<h2 id=\"qqq-vs-qqqm-environment-social-and-governance-ratings-esg\">QQQ vs QQQM &#8211; Environment, Social and Governance Ratings (ESG)<\/h2>\n\n\n\n<p>The MSCI ESG is a registered investment adviser under the <a href=\"https:\/\/www.sec.gov\/investment\/laws-and-rules\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Investment Advisers Act of 1940<\/strong><\/a>. It provides fund ratings and assesses the resiliency of portfolios to long-term risks and opportunities posed by <strong>environmental, social, and governance issues<\/strong>. The top-rated fund receives an <strong>AAA<\/strong>, while the worst-rated fund gets <strong>CCC<\/strong>.<\/p>\n\n\n\n<p>Highly rated mutual funds are those that have demonstrated strong or improving management of financially important <strong>environmental, social, and governance issues<\/strong>. Some organizations, on the other hand, maybe well-positioned to withstand adverse environmental effects.<\/p>\n\n\n\n<p>Let\u2019s look at how many ratings do these two equity ETFs got &#8211;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><\/td><td>QQQ (AA)<\/td><td>QQQM (AA)<\/td><\/tr><tr><td><strong>MSCI ESG Quality Score<\/strong><\/td><td>7.74 \/ 10<\/td><td>7.74 \/ 10<\/td><\/tr><tr><td><strong>Peer Group Percentile Rank<\/strong><\/td><td>66.19<\/td><td>66.55<\/td><\/tr><tr><td><strong>Global Percentile Rank<\/strong><\/td><td>67.57<\/td><td>67.63<\/td><\/tr><tr><td><strong>SRI Screening Criteria Exposure<\/strong><\/td><td>1.73%<\/td><td>1.74%<\/td><\/tr><tr><td><strong>Exposure to Sustainable Impact Solutions<\/strong><\/td><td>&#8212;<\/td><td>&#8212;<\/td><\/tr><tr><td><strong>Weighted Avg. Carbon Intensity (t CO2e\/$M Sales)<\/strong><\/td><td>50.59<\/td><td>50.60<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The table shows that even the ESG ratings are similar of these two ETFs. But, now the question is, which one to choose, right?<\/p>\n\n\n\n<h2 id=\"qqq-vs-qqqm-is-the-latest-qqqm-worth-purchasing-over-qqq\">QQQ vs QQQM &#8211; Is the Latest QQQM Worth Purchasing Over QQQ?<\/h2>\n\n\n\n<p>For ETF investors, the existence of a lower trading costs competitor eating on fees and offering similar returns is almost always desirable. QQQM <strong>offers better management of dividends<\/strong>, less average spread, and less volatility. But it is difficult to say which one will have better future performance.<\/p>\n\n\n\n<p>However, my choice will be to <strong>stick with QQQM<\/strong> as it offers almost similar returns, identical perks, same entire risk profile at a much cheaper price. Moreover, if you\u2019re investing in a <strong>tax-advantaged account and own QQQ, move to QQQM<\/strong>. End of story.<\/p>\n\n\n\n<p>Also, the buyers should carefully review the performance of each ETF over the past few months to better understand their choice. It\u2019s because different market scenario requires different trading strategy.<\/p>\n\n\n\n<h2 id=\"final-words\">Final Words<\/h2>\n\n\n\n<p>Looking to invest in <a href=\"https:\/\/investorimpactlab.com\/best-tech-etfs\/\" data-type=\"post\" data-id=\"184\">technology ETFs<\/a> and got confused between QQQ and QQQM? Well, don\u2019t put much pressure on your mind and just select QQQM. Everything that QQQ offers come with QQQM.<\/p>\n\n\n\n<p>When it comes to performance, <strong>QQQM has managed to match QQQ\u2019s return percentage every year since its inception<\/strong>. The only difference between the two is that QQQ can provide a <strong>little extra income via dividend yield<\/strong>.<\/p>\n\n\n\n<p>So, whichever ETF you choose, don\u2019t forget to do proper research first. After all, it\u2019s the money that is involved; risks are always greater than we think.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently a strange thing caught my attention. Many people are unaware of the two famous siblings in the stock market &#8230; <a title=\"QQQ vs. QQQM &#8211; Is QQQ Still a Good Purchase?\" class=\"read-more\" href=\"https:\/\/investorimpactlab.com\/qqq-vs-qqqm\/\" aria-label=\"More on QQQ vs. QQQM &#8211; Is QQQ Still a Good Purchase?\">Read story<\/a><\/p>\n","protected":false},"author":6,"featured_media":447,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[],"_links":{"self":[{"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/posts\/442"}],"collection":[{"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/comments?post=442"}],"version-history":[{"count":9,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/posts\/442\/revisions"}],"predecessor-version":[{"id":543,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/posts\/442\/revisions\/543"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/media\/447"}],"wp:attachment":[{"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/media?parent=442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/categories?post=442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investorimpactlab.com\/wp-json\/wp\/v2\/tags?post=442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}