FESM vs QQQ
Fidelity Enhanced Small Cap Core ETF vs Invesco QQQ Trust, Series 1
Quick Verdict
QQQ has a lower expense ratio. FESM delivered stronger 1-year returns. FESM offers more diversification with 583 holdings.
Side-by-Side Comparison
| Metric | FESM | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.28% | 0.18% | |
| AUM | $5.8B | $455.8B | |
| Dividend Yield | 0.71% | 0.41% | |
| Holdings | 625 | 108 | |
| YTD Return | +27.82% | +18.31% | |
| 1Y Return | +42.97% | +25.37% | |
| 3Y Return (annualized) | - | +25.79% | |
| 5Y Return (annualized) | - | +15.20% | |
| Volatility (annualized) | 19.8% | 30.6% | |
| Max Drawdown | -26.9% | -83.0% | |
| Fund Family | Fidelity Investments (US) | Invesco (US) | |
| Category | Equity | Equity | |
| Inception | Nov 20, 2023 | Mar 10, 1999 |
FESM vs QQQ Performance
Fidelity Enhanced Small Cap Core ETF (FESM) is a ETF from Fidelity Investments (US) and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year FESM returned +42.97% while QQQ returned +25.37%. Year to date, FESM is up 27.82% versus a gain of 18.31% for QQQ.
Risk: Volatility and Drawdowns
QQQ has been the more volatile fund, with annualized monthly volatility of 30.6% compared with 19.8% for FESM. 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 -26.9% for FESM 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 0.65. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FESM charges 0.28% per year while QQQ charges 0.18%. On a $10,000 position that is $28 vs $18 annually, a gap of $10 per year that compounds over a long holding period. On income, FESM currently yields 0.71% against 0.41% for QQQ.
Holdings Overlap
Frequently Asked Questions
Which is cheaper, FESM or QQQ?
FESM has an expense ratio of 0.28% while QQQ charges 0.18%. QQQ is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, FESM or QQQ?
Over the past year FESM returned +42.97% vs +25.37% for QQQ, so FESM leads on 1-year performance. Over the longest common window we track (3 years), FESM annualized +28.45% vs +13.10% for QQQ. Past performance does not guarantee future results.
Which is riskier, FESM or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 19.8% for FESM. Worst drawdown: FESM -26.9% vs QQQ -83.0%.
Should I hold both FESM and QQQ?
FESM and QQQ have a monthly-return correlation of 0.65, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FESM and QQQ?
FESM and QQQ share 2 common holdings with a 0.1% weight overlap. Combined, they hold 684 unique securities.
Which pays a higher dividend, FESM or QQQ?
FESM yields 0.71% while QQQ yields 0.41%, so FESM currently pays the higher dividend yield.
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