QQQJ vs QQQM vs QQQN vs QQQE vs QQQ: What’s The Difference?

Comparing Nasdaq ETFs

In 2022, there are a lot of different Nasdaq funds to choose from. In this article, projectfinance will compare five of the more popular ETFs in the tech space: QQQJ, QQQM, QQQN, QQQE and QQQ.

It is important to note that a few of the funds on our list are almost identical (QQQ & QQQM), while others are quite different indeed (QQQJ & QQQE). 

So which fund is best for you? Let’s first break down the data from our 5 ETFs in a table, and then put each one under the microscope!

              TAKEAWAYS

  • The QQQ ETF tracks the Nasdaq 100 Index and is the oldest and most popular fund on our list.

  • QQQM is basically an exact replica of QQQ with lower fees.

  • QQQE tracks the Nasdaq 100 on an “equal weight” basis, which provides better diversification.

  • QQQJ tracks the next 100 stocks in queue for inclusion in the Nasdaq-100 Index.

  • QQQN tracks the next 50 stocks in queue for inclusion in the Nasdaq-100 Index.
QQQJ QQQM QQQN QQQE QQQ

Fund Issuer:

Invesco
Invesco
VictoryShares
Direxion
Invesco

Fund Name:

Fund Category:

Mid-Cap Growth
Large-Cap Growth
Mid-Cap Growth
Large-Cap Growth
Large-Cap Growth

Underlying Index:

Expense Ratio (fees):

0.15%
0.15%.
0.18%
0.35%
0.20%

Number of Holdings:

101
104
49
102
102

1 Year Return:

-7.92%
+14.06%
-8.07%
+4.56%
+14.15%

Morningstar Rating:

Not Rated
Not Rated
Not Rated
☆☆☆☆
☆☆☆☆☆

Fund Inception Date:

10/13/2020
10/13/2020
09/09/2020
03/21/2012
03/10/1999

Fund Structure:

ETF
ETF
ETF
ETF
UIT

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What Is the QQQ ETF?

"Invesco QQQ is an exchange-traded fund that tracks the Nasdaq-100 Index™ and features Apple, Google, Microsoft, and more."

Invesco

Invesco’s QQQ Exchange-Traded Fund (ETF) is the dinosaur on our list. It was one of the first NASDAQ funds issued and has been active since 1999. The next oldest fund on our list is QQQE, which began 13 years later in 2012.

The Invesco QQQ ETF passively follows the Nasdaq 100 index. 

➥ The Nasdaq 100 Index represents 100 of the largest US and international non-financial companies listed on the Nasdaq Stock Market.

Like most of the funds on our list, QQQ is dominated by big technology companies. The larger of these companies include the “FAANG” stocks – Facebook, Amazon, Apple, Netflix, and Google.

So how have big tech companies fared in the overall market, as indicated by the S&P 500 tracking ETF SPY?

Let’s find out!

QQQ vs SPY: 5 Year Chart

As we can see, QQQ has outperformed SPY considerably over the past 5 years. 

Let’s next take a look under the hood of QQQ by looking at its sector allocation strategy and top holdings. 

QQQ Sector Allocation

Image from Invesco

Ae we can see, Invesco’s QQQ ETF is more than just a tech fund. In addition to information technology companies, its sector allocation spans across multiple sectors and industries. 

But what companies in these sectors does QQQ invest in most? Let’s take a look at the big five next!

QQQ Top Five Holdings

Company Weight

Apple Inc

12.53%

Microsoft Corp

10.22%

Amazon.com Inc

7.32%

Tesla Inc

4.95%

NVIDIA Corp

4.00%

QQQ has huge exposure to AAPL. Why is this? The Nasdaq 100 is a modified capitalization-weighted index. AAPL is the largest company by market capitalization and therefore has the greatest weight. 

Not all ETFs on our list are weighted; QQQE (which we will soon get to) is an equal weight ETF. 

What Is the QQQM ETF?

"The Invesco NASDAQ 100 ETF (Fund) is based on the NASDAQ-100 Index (Index). The Fund will invest at least 90% of its total assets in the securities that comprise the Index. The Index includes securities of 100 of the largest domestic and international nonfinancial companies listed on Nasdaq."

Invesco

Invesco’s Nasdaq 100 ETF QQQM has a lot in common with their QQQ fund. The stocks contained within these two funds are mirror images of each other. However, there are two differences worth noting:

QQQ vs QQQM: 2 Differences

  1. QQQ is structured as a UIT (unit investment trust) while QQQM is an ETF.
  2. QQQ charges a fee of 0.20%; QQQM charges a fee of 0.15%

QQQ being structured as a UIT makes no material difference on the performance of the fund when comparing it to QQQM’s performance. 

What should interest you here is the difference in expense ratios. QQQ does indeed charge a higher fee than QQQM. Though the difference is relatively small (0.05%), over time, fees and expenses can really add up.

What we have here, essentially, is two identical funds with one charging a higher expense ratio. QQQM wins every time. 

Read! ETF vs ETP vs ETN vs ETC: What’s the Difference?

QQQM Sector Allocation

Image from Invesco

QQQM Top Five Holdings

Company Weight

Apple Inc

12.53%

Microsoft Corp

10.22%

Amazon.com Inc

7.32%

Tesla Inc

4.95%

NVIDIA Corp

4.00%

What Is the QQQE ETF?

"QQQE provides equal-weight exposure to all NASDAQ-100® Index holdings."

Direxion

Both QQQ and QQQM track the Nasdaq-100 Index. This index is weighted.

The top 5 stocks in both QQQ and QQQM account for approximately 40% of these funds’ value. That’s not a lot of diversification!

To answer this desire for diversification, the NASDAQ-100 Equal Weighted Index was created. 

In 2012, Direxion created an ETF to track this index: The Direxion NASDAQ-100® Equal Weighted Index Shares (QQQE).

This ETF has equal weighting on all of its holdings. For example, AAPL (which is 12.5% of QQQs holdings) represents 1% of QQQE’s fund. 

Since the smallest company in this index has the same weight as the largest company, it is better diversified. 

However, this diversification comes with a price: QQQE charges a fee of 0.35%, the highest on our list. 

Is the cost justified? Let’s compare QQQ/QQQM with QQQE to find out. 

QQQ/QQQM vs QQQE

Though QQQE is a great alternative to the top-heavy QQQ ETF, its performance has lagged. Why? It places more weight on those smaller companies, which tend to be focused on consumer staples, industries, and utilities. 

Historically, these less volatile stocks underperform the FAANG juggernauts, as shown in the 5-year chart below.

QQQE Sector Allocation

The below chart illustrates the difference between sector allocation in QQQ/QQQM (as represented by XNDX) and the QQQE equal-weighted index (as represented by NETR).

Image from Direxion

QQQE Top 5 Holdings

Every one of the holdings within the QQQE ETF has the same weight of 1%.

Company Weight

Apple Inc

1%

Microsoft Corp

1%

Amazon.com Inc

1%

Tesla Inc

1%

NVIDIA Corp

1%

What Is the QQQJ ETF?

"The Invesco NASDAQ Next Gen 100 Fund (Fund) is based on the NASDAQ Next Generation 100 Index (Index). The Fund will invest at least 90% of its total assets in the securities that comprise the Index by investing in the 101st to the 200th largest companies on the NASDAQ"

Invesco

So far, we have only looked at ETFs that track the Nasdaq 100 Index. 

Invesco’s QQQJ Next Gen ETF tracks the NASDAQ Next Generation 100 Index.

These are the companies in the waiting pool to join the Nasdaq 100. There are no mega-cap stocks in this index. QQQJ is mostly comprised of mid-cap stocks. 

Stocks in this index are the less capitalized “up-and-comers” in the tech space. 

Because of this, QQQJ can be more volatile than the other ETFs we have covered in this list. 

QQQJ Sector Allocation

Image from Invesco

QQQJ Top 5 Holdings

Company Weight

Trade Desk Inc/The

2.18%

MongoDB Inc

2.00%

Expedia Group Inc

1.97%

Enphase Energy Inc

1.95%

CoStar Group Inc

1.82%

What Is the QQQN ETF?

"The VictoryShares Nasdaq Next 50 ETF offers exposure to the new generation of innovators: 50 stocks that are next in line for inclusion in the Nasdaq-100 Index®. The Fund seeks to provide investment results that track the performance of the Nasdaq Q-50 Index® before fees and expenses."

VictoryShares

Victory Shares Nasdaq Next 50 ETF QQQN tracks the Nasdaq Q-50 index

This ETF is similar to the QQQJ ETF, but QQQN only tracks the next 50 stocks in line to join the Nasdaq 100. 

Let’s do a quick 1-year comparison between QQQJ and QQQN. 

QQQJ vs QQQN: 1 Year Chart

As we can see, the performance of these two ETFs is quite similar. 

It is worth noting that the stocks within QQQN are better capitalized than those that comprise QQQJ. Because of this, QQQN should experience marginally less volatility than QQQJ over time. 

QQQN Sector Allocation

Image from VictoryShares

QQQN Top Five Stocks

Company Weight

BAKER HUGHES CO

3.46%

GLOBALFOUNDRIES INC

3.09%

TRADE DESK INC

2.97%

MONGODB INC

2.80%

ENPHASE ENERGY INC

2.72%

QQQJ vs QQQM vs QQQN vs QQQE vs QQQ: What's The Best?

A lot of the funds on our list are relatively new, so it is impossible to compare their long-term performance. 

  • QQQ, QQQM, and QQQE all track the Nasdaq 100 index.

  • QQQJ and QQQN track the more growth-centric companies just outside of the Nasdaq 100.

  • A well-diversified portfolio will have exposure to as many stocks as possible, including those within the Nasdaq 100 as well as those on the cusp of joining the index.

FAQs: QQQJ vs QQQM vs QQQN vs QQQE vs QQQ

QQQ is structured as a unit investment trust (UIT) while QQQM is structured as an ETF. Though their performance is identical, QQQM charges a lower expense ratio of 0.15% as compared to the QQQ fee of 0.20%

QQQ invests tracks the Nasdaq 100 index while QQQJ tracks Nasdaq Next Generation 100 Index (Index). This latter index invest in the 101st to the 200th largest companies on the NASDAQ.

Historically, QQQE has underperformed QQQ. QQQE’s equal weight structure applies more allocation to companies outside of tech, such as consumer staples and utilities. These sectors generally underperform in bull markets. 

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Mike Martin

Mike Martin

Mike was a writer for projectfinance. He has spent over 15 years in the finance industry, working for such companies as thinkorswim, TD Ameritrade and Charles Schwab. His work has appeared in the Financial Times, the Chicago Sun-Times, and The Buffalo News.

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2 thoughts on “QQQJ vs QQQM vs QQQN vs QQQE vs QQQ: What’s The Difference?

  1. Hey Paul! That’s impossible to say! Nobody knows what will happen in the future (will mid-caps outperform large-caps??)

    QQQ and QQQM are, however, the most popular ETFs on the list. These products are identical, with QQQM charging a lower fee than QQQ.

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