BlackRock's new iShares Nasdaq-100 ETF (IQQ) is gaining modest inflows but significantly lags Invesco's QQQ, which continues to attract vastly more capital and trading volume. This highlights the challenge of dislodging established, highly liquid ETFs, even with a lower expense ratio, as investors prioritize liquidity and an established ecosystem.
BlackRock launched IQQ with a lower expense ratio to compete with Invesco's QQQ, but early data shows QQQ continues to attract significantly more inflows and trading volume. This matters because it demonstrates that for highly liquid, established ETFs, fee wars alone may not be enough to shift investor behavior, who prioritize liquidity and an established options market. In the short term, QQQ's dominance remains unchallenged, while IQQ faces an uphill battle. Long-term, if IQQ can build a track record and liquidity, it might gain more traction, but for now, Invesco's QQQ and its lower-cost sibling QQQM are the preferred choices, posing a key risk for BlackRock's competitive strategy.