FDM vs QQQ
First Trust Dow Jones Select MicroCap Index Fund vs Invesco QQQ Trust, Series 1
Quick Verdict
QQQ has a lower expense ratio. FDM delivered stronger 1-year returns. FDM offers more diversification with 149 holdings.
Side-by-Side Comparison
| Metric | FDM | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.60% | 0.18% | |
| AUM | $277M | $496.3B | |
| Dividend Yield | 1.36% | 0.44% | |
| Holdings | 149 | 108 | |
| YTD Return | +22.05% | +19.52% | |
| 1Y Return | +32.75% | +26.68% | |
| 3Y Return (annualized) | +20.23% | +26.64% | |
| 5Y Return (annualized) | +11.58% | +15.36% | |
| Volatility (annualized) | 21.1% | 30.6% | |
| Max Drawdown | -64.0% | -83.0% | |
| Fund Family | First Trust Portfolios (US) | Invesco (US) | |
| Category | Equity | Equity | |
| Inception | Sep 27, 2005 | Mar 10, 1999 |
FDM vs QQQ Performance
First Trust Dow Jones Select MicroCap Index Fund (FDM) is a ETF from First Trust Portfolios (US) and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year FDM returned +32.75% while QQQ returned +26.68%. Year to date, FDM is up 22.05% versus a gain of 19.52% for QQQ.
Over three years, FDM compounded at +20.23% per year against +26.64% for QQQ; over five years the annualized figures are +11.58% and +15.36% respectively. Across the full 21-year window we track, QQQ has the edge at +13.14% annualized vs +8.19%. 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 21.1% for FDM. 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 -64.0% for FDM 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 0.68. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FDM charges 0.60% per year while QQQ charges 0.18%. On a $10,000 position that is $60 vs $18 annually, a gap of $42 per year that compounds over a long holding period. On income, FDM currently yields 1.36% against 0.44% for QQQ.
Holdings Overlap
FDM and QQQ share 0 holdings out of 248 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, FDM or QQQ?
FDM has an expense ratio of 0.60% while QQQ charges 0.18%. QQQ is the cheaper option. On a $10,000 investment, that is $42 per year of difference.
Which performed better, FDM or QQQ?
Over the past year FDM returned +32.75% vs +26.68% for QQQ, so FDM leads on 1-year performance. Over the longest common window we track (21 years), FDM annualized +8.19% vs +13.14% for QQQ. Past performance does not guarantee future results.
Which is riskier, FDM or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 21.1% for FDM. Worst drawdown: FDM -64.0% vs QQQ -83.0%.
Should I hold both FDM and QQQ?
FDM and QQQ have a monthly-return correlation of 0.68, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FDM and QQQ?
FDM and QQQ share 0 common holdings with a 0.0% weight overlap. Combined, they hold 248 unique securities.
Which pays a higher dividend, FDM or QQQ?
FDM yields 1.36% while QQQ yields 0.44%, so FDM currently pays the higher dividend yield.
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