Big Shift for QQQ: Lower Fees, New Structure — But Same DNA
What’s Happening?
Invesco has made a major structural change to its flagship ETF, Invesco QQQ (QQQ) — one of the most popular growth ETFs in the world.
As of December 22, 2025, QQQ has:
• Converted from a Unit Investment Trust (UIT) to an open-end fund
• Reduced its annual expense ratio from 0.20% to 0.18%
This change was approved by investors on December 19, 2025 and does not trigger taxes or portfolio rebalancing.
Why This Change Matters
1️⃣ More Flexibility = Slightly Better Efficiency
As an open-end fund, QQQ can now:
• Lend securities to generate extra income
• Reinvest idle cash more efficiently
These are standard ETF practices and may help QQQ track its index more closely, potentially improving long-term returns — even if only marginally.
Important:
• The Nasdaq-100 Index itself did not change
• QQQ still uses the same replication method
• Morningstar’s overall view of the strategy remains unchanged
Fee Cut: Good News, But Context Matters
The reduction to 0.18% is notable because ETF fee cuts have become rare lately.
However, QQQ is still:
• More expensive than rivals like
• Vanguard Growth ETF (VUG): 0.04%
• Schwab US Large-Cap Growth ETF (SCHG): 0.04%
These alternatives:
• Hold many of the same large-cap growth stocks
• Are not restricted to Nasdaq-listed companies
• Carry higher Morningstar ratings
️ Why QQQ Had Restrictions in the First Place
QQQ’s old UIT structure was a legacy from the early days of ETFs.
That structure:
• Limited how Invesco could use the ETF’s revenue
• Forced a large portion of earnings into marketing and sponsorships
• NCAA partnerships
• High-profile public events
By switching structures, Invesco can now retain much more of QQQ’s estimated $150 million annual revenue — a meaningful incentive behind the change.
Performance: Still a Market Favorite
Despite its quirks, QQQ has delivered exceptional long-term results:
• 10.5% annualized returns since 1999
• Powered by giants like Apple, Nvidia, Amazon
• Resilient across multiple market cycles
This performance explains why QQQ remains one of the most widely held growth ETFs globally, with assets nearing $400 billion.
⚠️ The Hidden Weaknesses Investors Should Know
1️⃣ A Flawed Index Design
The Nasdaq-100 was created to promote the Nasdaq exchange, not optimize investment outcomes.
As a result:
• It excludes strong companies listed on other exchanges
(e.g., Salesforce, Oracle)
• Holdings must be sold if a company leaves Nasdaq — even if fundamentals remain strong
2️⃣ Heavy Tech Concentration
As of December 2025:
• Over 50% of QQQ is in technology
• Another 30% sits in tech-adjacent sectors
This makes QQQ:
• More volatile than broader growth ETFs
• Vulnerable during market downturns
(as seen in 2022)
3️⃣ Top-Heavy Portfolio Risk
Market-cap weighting is logical and efficient, but:
• It can create concentration risk
• The top holdings can dominate performance
To manage this, the index:
• Conducts special rebalances when concentration gets too high
• Example: July 2023 rebalance reduced top-7 holdings from 55% to 43%
Bottom Line for Investors
• ✅ Structural change improves efficiency
• ✅ Lower fees are a welcome bonus
• ❌ The index’s design limitations remain
• ⚠️ High concentration means higher volatility
QQQ is still a powerful growth vehicle — but not a perfect one.
It works best when investors understand what they own, why it performs the way it does, and where the risks lie.
What’s Happening?
Invesco has made a major structural change to its flagship ETF, Invesco QQQ (QQQ) — one of the most popular growth ETFs in the world.
As of December 22, 2025, QQQ has:
• Converted from a Unit Investment Trust (UIT) to an open-end fund
• Reduced its annual expense ratio from 0.20% to 0.18%
This change was approved by investors on December 19, 2025 and does not trigger taxes or portfolio rebalancing.
Why This Change Matters
1️⃣ More Flexibility = Slightly Better Efficiency
As an open-end fund, QQQ can now:
• Lend securities to generate extra income
• Reinvest idle cash more efficiently
These are standard ETF practices and may help QQQ track its index more closely, potentially improving long-term returns — even if only marginally.
Important:
• The Nasdaq-100 Index itself did not change
• QQQ still uses the same replication method
• Morningstar’s overall view of the strategy remains unchanged
Fee Cut: Good News, But Context Matters
The reduction to 0.18% is notable because ETF fee cuts have become rare lately.
However, QQQ is still:
• More expensive than rivals like
• Vanguard Growth ETF (VUG): 0.04%
• Schwab US Large-Cap Growth ETF (SCHG): 0.04%
These alternatives:
• Hold many of the same large-cap growth stocks
• Are not restricted to Nasdaq-listed companies
• Carry higher Morningstar ratings
️ Why QQQ Had Restrictions in the First Place
QQQ’s old UIT structure was a legacy from the early days of ETFs.
That structure:
• Limited how Invesco could use the ETF’s revenue
• Forced a large portion of earnings into marketing and sponsorships
• NCAA partnerships
• High-profile public events
By switching structures, Invesco can now retain much more of QQQ’s estimated $150 million annual revenue — a meaningful incentive behind the change.
Performance: Still a Market Favorite
Despite its quirks, QQQ has delivered exceptional long-term results:
• 10.5% annualized returns since 1999
• Powered by giants like Apple, Nvidia, Amazon
• Resilient across multiple market cycles
This performance explains why QQQ remains one of the most widely held growth ETFs globally, with assets nearing $400 billion.
⚠️ The Hidden Weaknesses Investors Should Know
1️⃣ A Flawed Index Design
The Nasdaq-100 was created to promote the Nasdaq exchange, not optimize investment outcomes.
As a result:
• It excludes strong companies listed on other exchanges
(e.g., Salesforce, Oracle)
• Holdings must be sold if a company leaves Nasdaq — even if fundamentals remain strong
2️⃣ Heavy Tech Concentration
As of December 2025:
• Over 50% of QQQ is in technology
• Another 30% sits in tech-adjacent sectors
This makes QQQ:
• More volatile than broader growth ETFs
• Vulnerable during market downturns
(as seen in 2022)
3️⃣ Top-Heavy Portfolio Risk
Market-cap weighting is logical and efficient, but:
• It can create concentration risk
• The top holdings can dominate performance
To manage this, the index:
• Conducts special rebalances when concentration gets too high
• Example: July 2023 rebalance reduced top-7 holdings from 55% to 43%
Bottom Line for Investors
• ✅ Structural change improves efficiency
• ✅ Lower fees are a welcome bonus
• ❌ The index’s design limitations remain
• ⚠️ High concentration means higher volatility
QQQ is still a powerful growth vehicle — but not a perfect one.
It works best when investors understand what they own, why it performs the way it does, and where the risks lie.