State Street just launched the cheapest Nasdaq-100 ETF (QNDX): Should you switch from QQQ or QQQM?

• The Nasdaq-100 tracks 100 of the largest non-financial companies listed on Nasdaq, providing concentrated exposure to innovative, high-growth businesses. This has driven significant outperformance versus the S&P 500, albeit with greater volatility.

• Nasdaq's new 2026 rules make the index more responsive through quarterly reviews, a Fast Entry mechanism for major IPOs like SpaceX, and more flexible free-float requirements, while retaining weight caps to prevent any single company from becoming overly dominant.

• QNDX is the lowest-cost Nasdaq-100 ETF. However, its smaller asset base results in lower liquidity and wider bid-ask spreads, while its recent launch means it has yet to establish a track record of closely tracking the index.

• The best ETF depends on your objectives: QQQ remains the preferred choice for active traders, QQQM suits long-term investors, while QNDX is a promising newcomer worth watching.

What is the Nasdaq-100 and why do investors like it?

The Nasdaq-100 Index tracks the 100 largest non-financial companies listed on the Nasdaq Stock Market. Unlike broader US equity indices, it excludes banks, insurers and other financial companies, as well as companies that are listed on other exchanges such as the New York Stock Exchange (NYSE).

As a result, many household names such as Berkshire Hathaway, JPMorgan Chase, and Eli Lilly are absent from the index despite being among America's largest companies. Instead, the Nasdaq-100 includes companies such as NVIDIA, Apple, Micron, and prominent international companies like ASML, MercadoLibre, and PDD Holdings.

Today, the technology sector accounts for around 67% of the index, while consumer discretionary companies make up another 17%. Eight of the current top ten holdings are technology companies, although this partly reflects the Nasdaq-100's use of the Industry Classification Benchmark (ICB) rather than the more widely used Global Industry Classification Standard (GICS). For example, Alphabet is classified as a technology company under ICB despite being classified as Communication Services under GICS.

Table 1: Nasdaq-100 top 10 holdings

	Name	Sector	Weight
1	NVIDIA Corporation	Technology	7.62%
2	Apple	Technology	6.82%
3	Micron Technology	Technology	5.77%
4	Microsoft Corporation	Technology	4.53%
5	Amazon.com	Consumer Discretionary	4.10%
6	Advanced Micro Devices	Technology	3.84%
7	Alphabet Inc. Class A	Technology	3.22%
8	Tesla	Consumer Discretionary	3.10%
9	Alphabet Inc. Class C	Technology	2.99%
10	Intel Corporation	Technology	2.91%
Total			44.90%
Source: State Street. Data as of 26 June 2026

Figure 1: Nasdaq-100 has a high concentration of tech stocks (ICB classification)

Companies within the Nasdaq-100 tend to be characterised by technological innovation, significant investment in research and development, and strong growth. As a result, the index has delivered exceptional long-term performance. Since 1 January 2006, the Nasdaq-100 has generated total return of 2078%, compared with 780% for the S&P 500.

For investors, the Nasdaq-100 offers targeted exposure to companies that are shaping the future economy. Many of the world's most innovative businesses choose to list on Nasdaq, making the index an attractive option for investors seeking long-term capital growth.

That said, higher growth potential comes with greater risk. The Nasdaq-100 is considerably more concentrated than the S&P 500 and has a much larger exposure to technology stocks. This means it has historically experienced larger price swings during market corrections, although investors have been rewarded with stronger long-term returns over time.

Figure 2: Nasdaq-100 has outperformed the S&P 500 for over 20 years

The Nasdaq-100 is evolving

Beginning in 2026, Nasdaq introduced a more responsive review process. Instead of relying primarily on the annual December reconstitution for constituent changes, the index now conducts quarterly reviews in March, June and September. This allows fast-growing companies to enter the index sooner, while companies that no longer meet the ranking requirements can be removed, helping the index better reflect today's market leaders.

For exceptionally large new listings, Nasdaq has also introduced a Fast Entry mechanism. Companies that rank within the top 40 constituents by full market capitalisation are evaluated after just seven trading days and, if eligible, can be added shortly thereafter rather than waiting for the next scheduled review. Alongside this change, Nasdaq also replaced its previous 10% minimum free-float requirement with a more flexible approach, allowing companies with a relatively small proportion of publicly traded shares to enter the index with an appropriately reduced initial weight. As more shares become publicly available over time, their index weights can increase accordingly. This updated methodology is already being put into practice, with SpaceX scheduled to join the Nasdaq-100 on 7 July 2026 despite having a free float of only around 4% following its public listing.

Once eligible companies have been selected, the Nasdaq-100 determines their weight using a modified market-capitalisation methodology. Larger companies receive larger weights, although capping rules help prevent any single stock from becoming overly dominant. The index is rebalanced quarterly to ensure no company exceeds 24% of the index, while the annual December reconstitution applies a tighter 15% cap on individual constituents. Additional special reweightings may also be carried out if concentration limits are breached.

QNDX vs QQQ vs QQQM: Which Nasdaq-100 ETF should you choose?

With an understanding of the Nasdaq-100 Index, investors next need to decide which ETF offers the best way to gain exposure.

On 23 June 2026, State Street launched the SPDR Portfolio Nasdaq-100 ETF (NASDAQ: QNDX), offering investors a new way to gain exposure to the Nasdaq-100 alongside the long-established Invesco QQQ Trust (NASDAQ: QQQ) and its lower-cost sibling, the Invesco Nasdaq-100 ETF (NASDAQ: QQQM). Like its two competitors, QNDX seeks to track the Nasdaq-100 Index, giving investors exposure to the same underlying basket of companies.

Table 2: Comparison between QQQ, QQQM and QNDX

Name	Expense Ratio (%)	AUM	Average Daily Volume	Average bid-ask spread (%)	3Y Tracking Difference	Inception date
Invesco QQQ Trust (NASDAQ: QQQ)	0.18	USD 481.96B	53.6M	0.008	-1.38	10 March 1999
Invesco NASDAQ 100 ETF (NASDAQ:QQQM)	0.15	USD 99.63B	4.1M	0.016	1.04	13 October 2020
State Street® SPDR® Portfolio Nasdaq® 100 ETF (NASDAQ: QNDX)	0.10	USD 24.5M	220.0K	0.067	N/A	23 June 2026
Source: Bloomberg Finance L.P., iFAST Compilations Data as of 29 June 2026

Among the three, QNDX is currently the cheapest Nasdaq-100 ETF available, compared with 0.15% for QQQM and 0.18% for QQQ. Although the fee differences appear modest, lower fees compound over time and can translate into meaningful savings for long-term investors.

Another advantage of QNDX is its lower share price per unit, trading at around USD 24 per unit compared with approximately USD 298 for QQQM and USD 724 for QQQ. Although some brokers now offer fractional share investing, a lower share price per unit may still appeal to investors who prefer purchasing whole units or investing a small fixed amount regularly through dollar-cost averaging.

However, cost is only one aspect to consider. As the newest ETF, QNDX currently has the smallest assets under management and lowest trading volume among the three funds. This results in a wider bid-ask spread, meaning investors may incur slightly higher trading costs when buying or selling the ETF. In contrast, QQQ's significantly larger asset base and trading volume make it the most liquid option and is particularly well suited for investors who trade frequently.

Another important consideration is tracking difference—the difference between an ETF's returns and those of its underlying index. For passive ETFs, a smaller tracking difference is preferable, as it indicates the fund is closely replicating the performance of the index. Since QNDX was only launched in June 2026, it does not yet have a sufficiently long track record for investors to assess how consistently it tracks the Nasdaq-100 over time.

Overall, QQQ remains the preferred choice for active traders due to its deep liquidity and tighter bid-ask spreads. QQQM continues to stand out as a strong option for long-term investors, offering lower fees than QQQ alongside a well-established track record of closely tracking the Nasdaq-100. QNDX is an attractive new alternative, particularly for investors prioritising low costs and a lower share price. However, until it establishes a longer history of tracking the index efficiently, investors may prefer to stick with QQQM while keeping QNDX on their watchlist. If it proves capable of delivering a consistently small tracking difference over time, its industry-leading expense ratio could make it an increasingly compelling choice for long-term investors.

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.