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Written by Ben Gran for The Motley Fool->
The Invesco Nasdaq-100 ETF offers slightly lower fees than the popular Invesco QQQ Trust.
While QQQM has less liquidity than QQQ, this won’t be a disadvantage for most long-term investors.
Choosing the best Nasdaq ETFs doesn't have to be complicated. Sometimes the investment companies make it easy for you. One of the best Nasdaq-100 ETFs is the Invesco QQQ Trust (NASDAQ: QQQ).
This fund is so popular that it's often used as a shorthand for the performance of the underlying Nasdaq-100 index that it tracks -- investors often refer to the index as "the Qs."
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But what if there was a better way to buy the Qs? Invesco offers another Nasdaq-100 tracking ETF with lower fees. It's called the Invesco Nasdaq-100 ETF (NASDAQ: QQQM).
Let's see why buying the Invesco Nasdaq-100 ETF might be a better choice for most growth stock investors.
The Invesco Nasdaq-100 ETF has the same 102 holdings as the Invesco QQQ Trust. The fund's top holdings are major tech names like Nvidia (NASDAQ: NVDA) (8.2% of the fund), Apple (NASDAQ: AAPL) (7.2%), Microsoft (NASDAQ: MSFT) (5.3%), Amazon (NASDAQ: AMZN) (5.1%), and Alphabet Class A shares (NASDAQ: GOOGL) (3.9%).
Because they own the same stocks, the two funds have almost identical performance. QQQM has delivered slightly better long-term returns, with average annual returns (by net asset value) of 13.37% over the past five years, compared with 13.31% for QQQ.
Both funds are up more than 13% year to date and have gained over 43% in the past year, outperforming the S&P 500 index. The Invesco QQQ Trust has slightly outperformed QQQM during those time frames by only 0.04%.
The most important difference between these two funds is that the Invesco Nasdaq-100 ETF charges slightly lower fees. Its expense ratio of 0.15% is lower than QQQ's 0.18%. That might not sound like much. Saving 0.03% on fees means that in one year, a $10,000 investment in QQQM would pay about $3 less.
Another difference is that the Invesco Nasdaq-100 ETF has less liquidity than QQQ. The lower-cost fund has net assets of about $82.9 billion and average trading volume of 4.1 million shares, while QQQ has about $440.3 billion of net assets and average volume of 59.8 million shares.
These are ultimately minor differences. Less liquidity isn't a disadvantage for most long-term investors. Most people who are not professional traders will likely be better off buying QQQM instead of QQQ. But saving money on fees is always worth doing. The lower fees can make QQQM a better choice than QQQ for long-term investors seeking exposure to major U.S. tech stocks with strong growth potential.
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Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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