DFNM vs QQQ
Dimensional National Municipal Bond ETF vs Invesco QQQ Trust, Series 1
Quick Verdict
DFNM has a lower expense ratio. QQQ delivered stronger 1-year returns. DFNM offers more diversification with 1,094 holdings.
Side-by-Side Comparison
| Metric | DFNM | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.17% | 0.18% | |
| AUM | $2.3B | $496.3B | |
| Dividend Yield | 2.98% | 0.44% | |
| Holdings | 1,094 | 108 | |
| YTD Return | +0.28% | +16.64% | |
| 1Y Return | +3.38% | +27.27% | |
| 3Y Return (annualized) | +3.06% | +25.96% | |
| 5Y Return (annualized) | - | +14.54% | |
| Volatility (annualized) | 4.1% | 30.6% | |
| Max Drawdown | -7.0% | -83.0% | |
| Fund Family | Dimensional | Invesco (US) | |
| Category | Tax Preferred | Equity | |
| Inception | Nov 15, 2021 | Mar 10, 1999 |
DFNM vs QQQ Performance
Dimensional National Municipal Bond ETF (DFNM) is a ETF from Dimensional and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year DFNM returned +3.38% while QQQ returned +27.27%. Year to date, DFNM is up 0.28% versus a gain of 16.64% for QQQ.
Over three years, DFNM compounded at +3.06% per year against +25.96% for QQQ. Across the full 5-year window we track, QQQ has the edge at +13.03% annualized vs +1.17%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
QQQ has been the more volatile fund, with annualized monthly volatility of 30.6% compared with 4.1% for DFNM. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -7.0% for DFNM and -83.0% for QQQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.62. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
DFNM charges 0.17% per year while QQQ charges 0.18%. On a $10,000 position that is $17 vs $18 annually, a gap of $1 per year that compounds over a long holding period. On income, DFNM currently yields 2.98% against 0.44% for QQQ.
Holdings Overlap
DFNM and QQQ share 0 holdings out of 276 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, DFNM or QQQ?
DFNM has an expense ratio of 0.17% while QQQ charges 0.18%. DFNM is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, DFNM or QQQ?
Over the past year DFNM returned +3.38% vs +27.27% for QQQ, so QQQ leads on 1-year performance. Over the longest common window we track (5 years), DFNM annualized +1.17% vs +13.03% for QQQ. Past performance does not guarantee future results.
Which is riskier, DFNM or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 4.1% for DFNM. Worst drawdown: DFNM -7.0% vs QQQ -83.0%.
Should I hold both DFNM and QQQ?
DFNM and QQQ have a monthly-return correlation of 0.62, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between DFNM and QQQ?
DFNM and QQQ share 0 common holdings with a 0.0% weight overlap. Combined, they hold 276 unique securities.
Which pays a higher dividend, DFNM or QQQ?
DFNM yields 2.98% while QQQ yields 0.44%, so DFNM currently pays the higher dividend yield.
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