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Why Millions of Investors Are Buying the Wrong NASDAQ ETF

By Omor Ibne Ehsan, Published Apr 13, 2:33PM EDT

Invesco QQQ Trust (QQQ) tracks only 100 largest Nasdaq stocks; Fidelity Nasdaq Composite Index ETF (ONEQ) holds 600+ for broader exposure.

ONEQ has outperformed the QQQ in the past year.

ONEQ’s real diversification is at portfolio margins; NVIDIA and Apple still represent 22% of holdings despite 600+ positions.

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Most investors seeking Nasdaq exposure reach for QQQ without hesitation. It’s the most traded ETF in the world, liquid, and synonymous with tech growth. The problem is that QQQ tracks the Nasdaq-100, which holds only the 100 largest non-financial companies on the exchange. That’s a narrow slice of a market with thousands of listed companies, and millions of investors never realize they’re missing the rest.

Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ) was built to solve exactly that problem. Launched in September 2003, ONEQ tracks the Nasdaq Composite Index and holds over 600 individual securities compared to QQQ’s 100. If QQQ gives you the penthouse, ONEQ gives you the whole building.

ONEQ provides broad Nasdaq exposure with meaningful weight to mega-caps but genuine reach into mid- and smaller-cap names that QQQ excludes entirely. Information technology dominates at 49% of the portfolio, with communication services at 15% and consumer discretionary at 13%. The sector mix is similar to QQQ, but the depth beneath the surface is where the two funds diverge.

The return engine gives you participation in Nasdaq-listed business earnings growth across a wider swath of the index. There are no options overlays, no leverage, and no exotic mechanics. ONEQ charges 21 basis points in annual expenses, compared to QQQ’s 18 basis points. The three-basis-point difference is essentially noise for long-term investors.

Where ONEQ earns its differentiation is in the names QQQ leaves out. Consider Marvell Technology (NASDAQ:MRVL | MRVL Price Prediction). ONEQ holds Marvell at a 0.23% weight, while QQQ holds it at 0.54% as its 44th-largest position. Marvell posted Q3 FY2026 revenue of $2.07 billion, up 37% year-over-year, with data center revenue of $1.52 billion representing 73% of total sales. CEO Matt Murphy said, “Marvell delivered record third-quarter revenue of $2.075 billion, exceeding the midpoint of guidance, driven by strong demand for our data center products.” The stock has gained 45% year-to-date and 149% over the past year. That kind of growth doesn’t show up in a fund holding only the top 100.

Does ONEQ Actually Deliver Broader Returns?

The honest answer is: sometimes yes, sometimes no, and the gap is rarely large. Over the past year, ONEQ returned 36% versus QQQ’s 33%. That’s a meaningful edge for the broader fund, driven partly by mid-cap outperformance. Over five years, the picture flips: QQQ returned 78% compared to ONEQ’s 65%. The decade-long comparison shows QQQ up 458% against ONEQ’s 423%.

The pattern is clear. When mega-cap tech leads, QQQ wins. When the rally broadens and mid-caps participate, ONEQ closes the gap or pulls ahead. Neither fund is universally superior. The question is which environment you expect.

The Tradeoffs Worth Understanding

Concentration despite breadth: ONEQ holds hundreds more stocks than QQQ, but NVIDIA and Apple alone account for nearly 22% of the fund. The diversification is real at the margins, but the top of the portfolio is nearly identical to QQQ. A severe drawdown in mega-cap tech hits both funds hard.

Smaller AUM and liquidity: ONEQ manages roughly $8.6 billion in assets versus QQQ’s $372.5 billion. For most retail investors, this doesn’t matter. For institutional traders or large orders, the bid-ask spread and volume gap between the two funds is real.

Mid-cap exposure is thin: While ONEQ holds names like Marvell that QQQ excludes, the weights are small. A company growing at 40% annually, but sitting at 0.23% of the fund, barely moves the total returns. The breadth is genuine, but its impact is modest in most environments.

ONEQ makes sense for investors wanting true Nasdaq Composite exposure, believing the next tech cycle will come from outside the top 10 names, and willing to accept slightly lower long-term returns for broader participation. For QQQ holders, it’s worth knowing that roughly 900 additional Nasdaq-listed companies exist beyond the top 100.