The QQQ ETF Wants to Lower Its Expense Ratio and I Don’t Care. Should You?

Core Insights - The article discusses the common investor misperception regarding the significance of an ETF's expense ratio, emphasizing that it should not be viewed solely as a cost but rather in the context of value received for that cost [1][2]. Group 1: Expense Ratio Insights - The Invesco QQQ Trust ETF (QQQ) is reducing its expense ratio from 0.20% to 0.18%, which represents a 10% decrease in the cost of holding the investment for large shareholders [3][4]. - The long-standing expense ratio of 0.20% for QQQ can be attributed to its dominant market position and lack of urgency from the issuer, as there has not been significant asset withdrawal in protest [5]. - Investors often overlook the importance of factors beyond cost, such as the level of options activity associated with QQQ, which enhances its attractiveness despite potentially higher expense ratios [6]. Group 2: Investment Strategy Considerations - The article suggests that focusing solely on expense ratios can lead to poor investment decisions, as more money is often lost chasing past performance than by investing in well-constructed ETFs with higher fees that align with investment objectives [7].