HFRO vs QQQ
Highland Opportunities and Income Fund vs Invesco QQQ Trust, Series 1
Quick Verdict
QQQ has a lower expense ratio. HFRO delivered stronger 1-year returns. QQQ offers more diversification with 108 holdings.
Side-by-Side Comparison
| Metric | HFRO | QQQ | Winner |
|---|---|---|---|
| Expense Ratio | 1.18% | 0.18% | |
| AUM | $650M | $455.8B | |
| Dividend Yield | 3.91% | 0.41% | |
| Holdings | 64 | 108 | |
| YTD Return | +24.59% | +19.68% | |
| 1Y Return | +28.14% | +26.75% | |
| 3Y Return (annualized) | +3.18% | +26.25% | |
| 5Y Return (annualized) | +0.50% | +15.39% | |
| Volatility (annualized) | 25.0% | 30.6% | |
| Max Drawdown | -60.5% | -83.0% | |
| Fund Family | NexPoint | Invesco (US) | |
| Category | Fixed Income | Equity | |
| Inception | Jan 13, 2000 | Mar 10, 1999 |
HFRO vs QQQ Performance
Highland Opportunities and Income Fund (HFRO) is a ETF from NexPoint and Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US). Over the past year HFRO returned +28.14% while QQQ returned +26.75%. Year to date, HFRO is up 24.59% versus a gain of 19.68% for QQQ.
Over three years, HFRO compounded at +3.18% per year against +26.25% for QQQ; over five years the annualized figures are +0.50% and +15.39% respectively. Across the full 9-year window we track, QQQ has the edge at +13.15% annualized vs -3.41%. 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 25.0% for HFRO. 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 -60.5% for HFRO 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 0.38. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
HFRO charges 1.18% per year while QQQ charges 0.18%. On a $10,000 position that is $118 vs $18 annually, a gap of $100 per year that compounds over a long holding period. On income, HFRO currently yields 3.91% against 0.41% for QQQ.
Holdings Overlap
HFRO and QQQ share 0 holdings out of 117 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, HFRO or QQQ?
HFRO has an expense ratio of 1.18% while QQQ charges 0.18%. QQQ is the cheaper option. On a $10,000 investment, that is $100 per year of difference.
Which performed better, HFRO or QQQ?
Over the past year HFRO returned +28.14% vs +26.75% for QQQ, so HFRO leads on 1-year performance. Over the longest common window we track (9 years), HFRO annualized -3.41% vs +13.15% for QQQ. Past performance does not guarantee future results.
Which is riskier, HFRO or QQQ?
QQQ has been the more volatile fund at 30.6% annualized versus 25.0% for HFRO. Worst drawdown: HFRO -60.5% vs QQQ -83.0%.
Should I hold both HFRO and QQQ?
HFRO and QQQ have a monthly-return correlation of 0.38, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between HFRO and QQQ?
HFRO and QQQ share 0 common holdings with a 0.0% weight overlap. Combined, they hold 117 unique securities.
Which pays a higher dividend, HFRO or QQQ?
HFRO yields 3.91% while QQQ yields 0.41%, so HFRO currently pays the higher dividend yield.
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