Invesco’s Nasdaq 100 ETF, QQQM, is enjoying quite the run of success in terms of asset inflows, with USD2.9 billion year to date, USD9.7 billion dollars since launch and having just achieved its USD12 billion in assets’ milestone.
Invesco’s Ryan McCormack, Senior Factor & Core Equity Strategist ETFs & Indexed Strategies, explains that QQQM tracks the same index as the QQQ (Nasdaq 100 Index) for 5bps less.
“We believe that QQQM may be a better indication of long-term investor sentiment into the innovative companies included in the index,” McCormack says.
“It’s been a very successful launch for Invesco and speaks to investor familiarity and interest in the the Nasdaq 100 universe and also an acknowledgment that the ETF structure has come a long way since QQQ was launched.”
The main difference between QQQM and QQQ is the product structure, as the QQQ was launched initially as a Unit Trust. “It was the more popular fund structure for these types of strategies back in the 1990s,” McCormack says. “As the fund ecosystem has evolved, the ETF structure offers some previously unavailable benefits, so we launched QQQM as a 40 Act ETF. The biggest difference between the two products is the expense ratio, which is 15 basis points on QQQM, against 20 on QQQ so there is a 25 per cent reduction for the longer term shareholders.”
QQQM is also able to engage in securities’ lending for a fee, which gets credited back to the fund and shows up in additional performance. QQQM also can reinvest dividends at the fund level.
“This product speaks to the many benefits of ETF structure,” he says. “QQQM, and other strategies in the ETF wrapper, offer benefits to the retail investor that would not have been available in a similar investment 20 years ago – it’s the democratisation of investing.”
McCormack believes that consistency of inflows, as well as the discussions he has with clients, indicate that investors in QQQM are mostly looking to invest longer term. “The Nasdaq 100 is the pre-eminent large cap growth index, which provides access to tenured innovation and growth companies that may be appealing to the longer term investors that we have seen coming into the fund.”
