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You can almost hear the wailing from Invesco’s Atlanta HQ. No sooner has the investment group got its hands on a share of the spoils from the world’s most lucrative ETF than two of Wall Street’s biggest beasts unveiled plans to try and prise some of the prize away.
As Bloomberg reported last week:
Just a day after BlackRock Inc. filed a challenger to Invesco’s Nasdaq 100-tracking ETF, State Street Corp. followed suit. On Tuesday, it submitted paperwork to launch the State Street SPDR Nasdaq 100 ETF, which would be its first fund focused on the tech-heavy gauge.
The BlackRock and State Street funds would be among just a handful of US-listed ETFs to solely track the Nasdaq 100 — and the first ones to not be managed by Invesco, which has run the $379 billion Invesco QQQ Trust Series 1 fund (ticker QQQ) since 1999. Exchange-operator Nasdaq has been historically selective about licensing out its namesake index, comprising the 100 largest non-financial companies listed on the Nasdaq exchange.
While other ETFs that add derivatives to the Nasdaq 100 stocks trade stateside, Invesco has enjoyed virtually exclusive access to the pure Nasdaq 100 in the US market. That relationship has produced QQQ, one of the largest ETFs globally, as well as the $70 billion Invesco Nasdaq 100 ETF (QQQM).
Regular Alphaville readers will recall that, due to a quirk in the structure of Invesco’s flagship $380bn Nasdaq 100-tracking QQQ ETF, the asset manager hasn’t actually been permitted to retain a single cent of the 20-basis point fee.
After Nasdaq had taken its licensing fee ($265mn in the year to September) and Bank of New York Mellon chunky $139mn in trustee fees, Invesco was forced to spend the $201mn that nominally flowed its way on marketing the fund — hence the ubiquity of the 17th letter of the alphabet at US airports and sports stadiums.
But in December, after a mammoth outreach campaign bordering on the outrageous, Invesco finally secured enough support from shareholders to alter QQQ’s structure to a regular ETF, meaning it can finally profit from running the fund.
The expected impact on Invesco’s bottom line was seismic enough to help its share price jump 60 per cent between July 2025, when the proposed structural change was first announced, and December, when it was finally sealed.
But now both BlackRock and State Street Investment Management have filed with the US Securities and Exchange Commission to launch their own Nasdaq 100 tracking ETFs. Assuming there is no objection from the SEC, both could go live in June under the 75-day rule.
And while neither has unveiled their fees as yet, the smart money is that both will undercut both the 18bp now levied by QQQ (following a 2bp trim as a sweetener to encourage shareholders to support the change of structure) and the 15bp of QQQM, Invesco’s $73bn mini QQQ, launched in 2020.
While ETF launches are two a penny these days, BlackRock and State Street’s filings stand out because Nasdaq hasn’t permitted any other asset manager to offer a straight Nasdaq 100 tracker in the US ever since QQQ debuted in 1999.
Invesco became the proud owner of QQQ following the takeover of Chicago’s PowerShares in 2006, and since then Nasdaq has instead maintained an exclusive relationship with the asset manager. This has resulted in an entire universe of mini-Qs, offering everything from an ESG version to a recently launched equal-weighted one, for which it can pocket the fees.
From the outside, it’s hard to shake the feeling that Nasdaq’s willingness to permit direct competitors to QQQ in the US is linked to the ETF’s new structure.
The old regime — where Invesco’s share of the spoils all had to be spent on marketing QQQ — was ideal for Nasdaq, as it benefited from wall-to-wall advertising for its flagship index, paid for by someone else’s balance sheet. Although Invesco has pledged to continue marketing QQQ heavily, from now on such spending will be discretionary rather than mandatory.
Nasdaq may instead be hoping that BlackRock (ticker IQQ) and State Street’s SSIM open their own marketing spigots as they seek to advertise their own new offerings.
BlackRock’s iShares arm already runs four Nasdaq 100-tracking ETFs in Europe, Canada and Hong Kong, managing around $20bn. Since 2024 it has even been possible for US-based investors to cobble together Nasdaq 100 exposure using iShares ETFs listed in their domestic market, via a combination of its Nasdaq Top 30 Stocks ETF (QTOP) and the iShares Nasdaq 100 ex-Top 30 ETF (QNXT), although given their fees are 20bp this would seem pretty pointless. They currently hold just $244mn between them.
The only other cracks in the Invesco-Nasdaq relationship (in the US at least) have been the latter granting permission for leveraged and inverse ETFs from ProShares, an equal-weighted version from Direxion, and options income variants from Global X, JPMorgan, Defiance and BlackRock.
BlackRock and SSIM face some obvious impediments to seizing market share from Invesco. The sheer size of QQQ endows it with enviable liquidity, tight spreads and a rich ecosystem of derivatives written against it, all of which the newbies may lack — in their early days at least.
Invesco seems to be banking on these factors, telling FT Alphaville:
Invesco QQQ has been synonymous with innovation for over 25 years, providing investors with deep liquidity and an operational efficiency that closely tracks its Nasdaq-100 index benchmark. Creating a foundational ETF ecosystem does not happen overnight, and Invesco has always taken a long-term view on building and facilitating its development. There is only one QQQ.
But seemingly rock-solid incumbency isn’t always set in stone. State Street’s SPY, long the largest ETF in the world, was overtaken by Vanguard’s cheaper rival S&P 500 tracker VOO last year. It now trails VOO by almost $200bn and has also slipped behind BlackRock’s IVV, another cheaper offering.
Invesco’s investor outreach campaign to secure investor support for its switcheroo seemed to annoy more than a few shareholders. It’ll be intriguing to see whether many are aggrieved enough to now jump ship.
