Don’t invest in QQQ ETF: Buy QQQM instead as tech stocks rise

Technology stocks have jumped sharply this year, helped by mega companies like Nvidia, Apple, Microsoft, and Meta Platforms. The tech-heavy Nasdaq 100 index has jumped to its highest level since April 2022. It has jumped by almost 40% from the lowest level in 2022. 

Why QQQM is better than QQQ

The best way of investing in the Nasdaq 100 index is to buy an ETF that tracks the index. Invesco QQQ is the biggest Nasdaq 100 index with over $190 billion in assets under management. The ETF’s top companies are Microsoft, Apple, Amazon, Nvidia, Meta Platforms, and Tesla among others. 

Invesco Nasdaq 100 ETF (QQQM) is another fund that tracks the Nasdaq 100 index. It was established in 2020 and has grown its assets under management to over $12.2 billion. Its composition is made up of similar companies like QQQ.

Invesco launched QQQM as a way of cushioning it from competition risks. For one, QQQ and other similar ETFs like SPY have an expense ratio of 0.20%. Because of the success of its first tech ETF, Invesco was aware that other companies would launch similar funds.

The only difference between QQQ and QQQM is the expense ratio. While QQQ has an expense ratio of 0.20% while QQQM has a ratio of 0.15%. While this is a small difference, it can add up when you are investing in the long term.

For example, a $100,000 investment in QQQ would attract a $200 fee in one year. A similar investment in QQQM would attract a $150 fee. These fees can add up in a long period of time. 

The only difference between the two is the dividend yield offered by the two companies. QQQ has a dividend yield of 0.28% vs QQQM’s 0.17%. Still, most people who invest in these ETFs do so because of their growth.

QQQM stock forecast

QQQM chart by TradingView

The daily chart shows that the Invesco Nasdaq 100 index has been in a strong bullish trend in the past few months. It has managed to flip the important resistance at $136.66 into support. This was an important level since it was the highest level on August 10. 

The fund has formed a golden cross, which is usually a bullish sign. It has also jumped above the 61.8% retracement level. Therefore, the shares will likely continue rising as buyers target the next resistance point at $165.97, 13.43% above the current level.