Invesco QQQ Trust (QQQ) Versus Invesco NASDAQ 100 ETF (QQQM): Which Should You Buy?

Invesco actually has two NASDAQ-100 ETFs: the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ-100 ETF (QQQM). A lot of new investors get confused about which to pick.

To be clear, it’s not a big deal if you accidentally buy one over the other, assuming your goal was simply to gain exposure to U.S. mega-cap growth with a heavy tech tilt.

But if you want to optimize, there are a few structural and practical differences that might make one a better fit. Here’s how I’d break it down.

Pick QQQ if...

You care most about liquidity, whether that’s for trading shares or more importantly, trading options.

QQQ is one of only three ETFs with daily-expiring options, not just weekly. That means tighter spreads, deeper liquidity, and more strike choices. You’ll almost always get filled near fair value.

It can also serve as a more flexible alternative to NASDAQ futures or NDX index options if you prefer not to deal with cash settlement, higher margin requirements, or overnight funding risk. QQQ’s ETF options are physically settled, giving you direct control over the underlying shares.

Pick QQQM if...

You’re a long-term buy-and-hold investor focused on minimizing costs and tracking error.

The key advantage is the lower expense ratio—0.15% for QQQM versus 0.20% for QQQ. On a $10,000 investment, that’s $15 in annual fees instead of $20. It sounds small, but over years of compounding, every basis point adds up.

The second difference is cash drag. QQQ is structured as a Unit Investment Trust (UIT), meaning it can’t reinvest dividends between distribution dates—it must hold them in cash until payout. Since most NASDAQ-100 companies have small but non-zero dividends, that uninvested cash slightly drags performance.

QQQM, by contrast, is a modern ETF under the Investment Company Act of 1940. It can reinvest dividends internally before paying them out, reducing idle cash and improving tracking efficiency.

Invesco shareholders are actually voting on this issue at a special meeting on October 24, 2025. If approved, QQQ would be converted from its legacy UIT structure to a 1940 Act ETF, just like QQQM.

That would eliminate the dividend reinvestment lag and finally allow Invesco to earn revenue from managing the fund instead of only being reimbursed for marketing expenses.

So, if you own QQQ, it’s worth keeping an eye on the outcome of that vote—it could be a significant change for one of the world’s most traded ETFs.

Final Takeaways: QQQ vs. QQQM

• Liquidity: QQQ is better suited for traders and options users thanks to daily-expiring options and higher volume.
• Cost efficiency: QQQM wins for long-term investors with a lower 0.15% expense ratio versus 0.20% for QQQ.
• Structure: QQQ’s UIT format creates minor cash drag, while QQQM’s open-end ETF structure allows full dividend reinvestment.
• Performance: Tracking is nearly identical, but QQQM’s lower fees and reinvestment efficiency should translate into slightly higher returns over time.
• Future watch: The upcoming October 24 vote could make QQQ and QQQM functionally identical, leaving liquidity as the main differentiator.

In short, pick QQQ for trading, QQQM for holding—and check back after October 24 to see if that distinction still matters.