The technology sector, led by the Magnificent 7 companies, including Apple Inc. (ticker: AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOG, GOOGL), Meta Platforms Inc. (META), Nvidia Corp. (NVDA) and Tesla Inc. (TSLA), has provided significant returns for stock investors over the past few years. Tech giants’ continuous commitment to growth and innovation has made them darlings of investors.
It is no wonder that many investors have prioritized the tech-heavy Nasdaq exchange. For example, Invesco QQQ Trust (QQQ), an exchange-traded fund that tracks the Nasdaq-100 Index (which consists of the 100 largest non-financial companies listed on the Nasdaq exchange), was the second-most-traded ETF in the U.S. as of June 30.
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Who can blame them? About 34% of the S&P 500 itself was in Magnificent 7 companies as of Sept. 10.
However, if you have tried researching or buying QQQ, you may have noticed another ETF with the ticker QQQM, the Invesco Nasdaq-100 ETF. This may have left you confused as to the difference between the two. Is the latter just a cheaper version of the former? Perhaps you even closed your eyes and bought the first one your mouse clicked on.
Let’s clear up the confusion by considering the similarities and differences between these two tech-focused ETFs and how you can decide on which one to choo
— QQQ and QQQM: The similarities.
— QQQ vs. QQQM: The differences.
— QQQ vs. QQQM: Which one should you buy?
— QQQ vs. QQQM: Should you reallocate?
— QQQ and QQQM: Should you buy a tech-heavy index at all?
QQQ and QQQM: The Similarities
First, let’s consider the major similarities between these two ETFs:
Tech-Heavy ETFs
The most obvious similarity is that both ETFs track the same index: the Nasdaq-100. At the time of this writing, 63% of the constituents of this index are in the tech sector. Thus, QQQ and QQQM are similar in that they are appropriate for investors who want large exposure to technology.
Performance
Over the past one and three years, QQQ returned an average of 25.65% and 25.79%, respectively, as of early September, according to data from Yahoo Finance. QQQM returned 25.71% and 25.86% over the same period.
Holdings
QQQ and QQQM have the same top 10 holdings: Nvidia, Microsoft, Apple, Amazon, Broadcom Inc. (AVGO), Meta, Netflix Inc. (NFLX), Alphabet (both share classes) and Tesla. The top 10 constitute 52.06% of QQQ and 51.99% of QQQM, a negligible difference.
If we focus on the technology stocks, both QQQ and QQQM have a 53.52% concentration in the information technology sector. The total number of stocks is also similar: 101 for QQQ and 105 for QQQM.
Administration
Both QQQ and QQQM carry out quarterly rebalancing and annual reconstruction.
QQQ vs. QQQM: The Differences
Expense Ratio
QQQ has an expense ratio of 0.2%, which is a bit higher than QQQM’s 0.15%. Since their average returns are almost the same, this means QQQM buyers will usually have higher net returns.
Yield and Distributions
At the time of writing, QQQ and QQQM have 30-day SEC yields of 0.47% and 0.53%, respectively. A similar story is told by their respective distribution rates: 0.41% for QQQ and 0.53% for QQQM. In all, QQQM generates more income for holders.
Price
As of Sept. 10, QQQ traded around $581 and QQQM traded at $239.
Demand and Supply
QQQ has a 30-day average daily trading volume of about 46.3 million shares, while QQQM’s is 3.5 million shares. QQQ also has higher outstanding shares (632.7 million shares to QQQM’s 250.5 million shares) and market value of net assets ($364.4 billion versus $59.4 billion).
Due to its higher trading volume and the presence of more market makers and institutional traders, QQQ has tighter bid-ask spreads than QQQM, especially during market stress. According to ETF.com, the average (mean) spread of both is 1 cent. As a percentage of the market price, though, the average spread of QQQ is zero, while that of QQQM is 0.01%.
However, the median bid-ask spread of both ETFs stands at zero.
Options Availability
QQQ has a more liquid options market. Similarly, you can trade QQQ options that expire on any day of the work week that the stock market is open. This makes it appropriate for all sorts of complex option strategies.
In contrast, there are very limited QQQM options. They aren’t always available each month, which limits the number of complex strategies you can execute with them.
Tax Efficiency
QQQ is structured as a unit investment trust, or UIT. Thus, it is more likely to distribute capital gains. This results in more taxable events for investors. On the other hand, QQQM is structured as a traditional ETF. Thus, it can use in-kind redemptions to avoid triggering capital gains and generating taxable events for investors.
Now that we have highlighted the differences, you may be wondering how they are relevant to your decision of whether to buy QQQ or QQQM. Let’s get more specific by accenting the implications of these differences:
[Read: How to Earn $1,000 a Month From Dividend Stocks]
QQQ vs. QQQM: Which One Should You Buy?
A cursory look at the previous section shows that QQQM tends to be more advantageous for long-term buy-and-hold investors. They can receive more income (higher yield and distribution), earn higher net returns (lower expense ratio) and pay lower taxes (fewer taxable events).
“QQQM is attractive for young or newer investors drawn to the lower price per share and expense ratio, and its greater simplicity,” according to Lawrence Klayman, founding partner of KlaymanToskes PLLC, a law firm specializing in investment loss recovery. “It’s also more tax-efficient because it minimizes capital gains distributions compared to QQQ.”
On the other hand, QQQ seems to be more appropriate for traders or active investors. This is because they have more liquidity, tighter spreads and a more robust options market.
“QQQ may be a good choice for options and derivatives traders because it offers a greater variety of spreads, straddles and exotic contracts,” says Klayman. “This can be a draw for experienced investors and traders who use options for hedging or income generation. Additionally, if you frequently reallocate capital or practice tactical asset allocation, QQQ’s higher liquidity facilitates quick entry and exit.”
The next time you see QQQ and QQQM, now you know which one you should select based on your investment profile.
But what if you already purchased QQQ as a long-term investor or QQQM as an active tactical investor or trader? Should you switch things up or leave it be?
QQQ vs. QQQM: Should You Reallocate?
QQQM has been growing in popularity in recent months compared to QQQ. At the time of writing, its year-to-date net fund flows ($14.1 billion) are nearly twice those of QQQ ($8 billion). Though QQQ is still the most valuable (in terms of market value of net assets), QQQM has been on a positive trajectory.
But should you switch from QQQ to QQQM, or vice versa, if the one you own does not fit your investment profile?
Selling QQQ for QQQM as a long-term investor has its pros — higher net returns, lower taxes and higher income. However, if you sell your QQQ holdings, the capital gains tax you will owe on the sale may be more significant than what you hope to benefit.
The sale can make sense, however, if you are holding QQQ at a loss (compared to your average entry price), since you can employ a tax-loss harvesting strategy. Also, depending on your tax bracket, the hit from paying capital gains tax may still be less than the extra benefits you will get from QQQM.
Does It Make Sense for Traders to Switch From QQQM to QQQ?
This makes sense for active traders, especially those who are big on options. After closing out any current QQQM trade, it may be better to switch to QQQ.
QQQ and QQQM: Should You Buy a Tech-Heavy Index at All?
Our focus has been on how to choose between QQQ and QQQM. But a final question is also important: Should you be buying a tech-heavy ETF in the first place?
As we have seen, tech stocks, due to their innovativeness, have often produced high returns for investors. For some perspective, note that QQQ has produced 495% more returns than the S&P 500 between 1999 and the first half of 2025, according to Invesco.
However, there is also a downside risk. When the market is in a downturn, tech-heavy funds tend to have deeper losses than the S&P 500. For instance, QQQ dropped by 32.5% (net asset value) in 2022, whereas the SPDR S&P 500 ETF (SPY) dropped by only 18.1%.
Thus, while buying a tech-heavy ETF makes sense, it should not be the only equity play in your portfolio. This is one area where good old diversification can be essential. For example, an equal-weight S&P 500 ETF can add more stability during economic downturns to a portfolio that has QQQ or QQQM (but consult your financial advisor to see what would work best for you).
Whichever way you decide to do it, ensure you have a diversified portfolio that can benefit in prosperous times while remaining steady during volatile periods.
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QQQ vs. QQQM: What’s the Difference? originally appeared on usnews.com
Update 09/11/25: This story was published at an earlier date and has been updated with new information.
