QQQ vs TAXF
Invesco QQQ Trust, Series 1 vs American Century Diversified Municipal Bond ETF
Quick Verdict
QQQ has a lower expense ratio. QQQ delivered stronger 1-year returns. TAXF offers more diversification with 785 holdings.
Side-by-Side Comparison
| Metric | QQQ | TAXF | Winner |
|---|---|---|---|
| Expense Ratio | 0.18% | 0.25% | |
| AUM | $496.3B | $686M | |
| Dividend Yield | 0.44% | 3.84% | |
| Holdings | 108 | 785 | |
| YTD Return | +16.64% | +0.81% | |
| 1Y Return | +27.27% | +6.01% | |
| 3Y Return (annualized) | +25.96% | +4.01% | |
| 5Y Return (annualized) | +14.54% | +0.72% | |
| Volatility (annualized) | 30.6% | 6.0% | |
| Max Drawdown | -83.0% | -13.9% | |
| Fund Family | Invesco (US) | American Century Investments | |
| Category | Equity | Tax Preferred | |
| Inception | Mar 10, 1999 | Sep 10, 2018 |
QQQ vs TAXF Performance
Invesco QQQ Trust, Series 1 (QQQ) is a ETF from Invesco (US) and American Century Diversified Municipal Bond ETF (TAXF) is a ETF from American Century Investments. Over the past year QQQ returned +27.27% while TAXF returned +6.01%. Year to date, QQQ is up 16.64% versus a gain of 0.81% for TAXF.
Over three years, QQQ compounded at +25.96% per year against +4.01% for TAXF; over five years the annualized figures are +14.54% and +0.72% respectively. Across the full 8-year window we track, QQQ has the edge at +13.03% annualized vs +1.91%. 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 6.0% for TAXF. 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 -83.0% for QQQ and -13.9% for TAXF. 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 0.52. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
QQQ charges 0.18% per year while TAXF charges 0.25%. On a $10,000 position that is $18 vs $25 annually, a gap of $7 per year that compounds over a long holding period. On income, QQQ currently yields 0.44% against 3.84% for TAXF.
Holdings Overlap
QQQ and TAXF share 0 holdings out of 593 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, QQQ or TAXF?
QQQ has an expense ratio of 0.18% while TAXF charges 0.25%. QQQ is the cheaper option. On a $10,000 investment, that is $7 per year of difference.
Which performed better, QQQ or TAXF?
Over the past year QQQ returned +27.27% vs +6.01% for TAXF, so QQQ leads on 1-year performance. Over the longest common window we track (8 years), QQQ annualized +13.03% vs +1.91% for TAXF. Past performance does not guarantee future results.
Which is riskier, QQQ or TAXF?
QQQ has been the more volatile fund at 30.6% annualized versus 6.0% for TAXF. Worst drawdown: QQQ -83.0% vs TAXF -13.9%.
Should I hold both QQQ and TAXF?
QQQ and TAXF have a monthly-return correlation of 0.52, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between QQQ and TAXF?
QQQ and TAXF share 0 common holdings with a 0.0% weight overlap. Combined, they hold 593 unique securities.
Which pays a higher dividend, QQQ or TAXF?
QQQ yields 0.44% while TAXF yields 3.84%, so TAXF currently pays the higher dividend yield.
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