Several clients have written to me inquiring about the barrage of calls, emails, and messages from Invesco regarding the ETF QQQ’s push to gather proxy votes. Here’s an excerpt of one client’s question and my response (greatly expanded for this article):
“…not the most consequential message you’ll receive this year, but my curiosity has been piqued … by the campaign from Invesco QQQ to cast a proxy vote. I’ve never seen anything like it – the mailings, the calls, and so on – for a process that, in my experience, has always been ultra-routine and pretty meaningless for someone like me. Can you explain, and do you have any advice?”
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Here’s how I responded
Regarding the campaign, you’re not alone. Many clients have noticed the unusually intense campaign from Invesco regarding the proxy vote for Invesco QQQ, and you’re right that it stands out from what’s usually a routine process for most fund shareholders.
Early on, my business partner suggested that I write and send an email to clients about this. Not realizing the intensity of Invesco’s push, I decided we didn’t need to, which turned out to be a mistake. In all my years in the business, I’ve never seen or heard of any company launching such an intense and aggressive proxy gathering campaign.
Here’s what’s really going on
Invesco is proposing to convert the ETF QQQ from its current structure (a unit investment trust, which dates back to the earliest ETFs) into a modern, open-ended exchange-traded fund. The primary rationale is to enhance flexibility, oversight, and reduce costs. Specifically, if shareholders approve, the QQQ expense ratio would decrease by 10% (from 0.20% to 0.18%), resulting in tens of millions of dollars in yearly savings across the fund. Importantly, this change won’t impact QQQ’s strategy, holdings, or tax characteristics, nor will it change the fund’s manager or its index-tracking approach.
The reason you’ve gotten multiple mailings and calls? Invesco requires a high level of shareholder participation: by law, converting QQQ’s trust structure requires more than half of all shares to be actively voted “yes.” Unlike typical votes where non-responses are ignored, in this case, non-votes count as “no” votes—which is why the fund is spending so much to encourage participation and obtain a quorum. With so many retail investors holding QQQ, this is a true logistical challenge.
Details of the push
- Three separate proposals must all pass: shareholders are voting on three linked items: conversion from a unit investment trust to an open-ended ETF, associated changes to the management/advisory structure, and the creation of a board of directors. If any proposal fails, none of the changes will be implemented.
- Non-votes count as “No” votes: Unlike routine proxy votes, shareholders who do not respond are counted against the proposals, making high participation essential.
- Shareholder benefits include:
- Lower expense ratio (from 0.20% to 0.18%, estimated savings ~$70 million/year).
- Enhanced governance via a new board overseeing the fund for the first time; greater reporting and transparency, including summary prospectuses and semi-annual reports.
- No change to investment objective, index, or tax treatment: The fund will continue to track the Nasdaq-100® Index. The conversion is a tax-free event for shareholders.
- Huge outreach effort: Invesco is spending an estimated $40 million on proxy solicitation to ensure quorum, highlighting the unusual scale and importance of this campaign.
- Record date: August 15, 2025. Only shareholders of record as of this date are eligible to vote.
- If approved, conversion is likely to happen by year-end or early 2026.
Potential downsides of shareholder approval
- Increased Operational Flexibility Means More Managerial Discretion: The move to an open-ended fund structure allows Invesco and its new board greater latitude in making changes, such as fee adjustments or introducing derivatives, that previously required more restrictive oversight under the unit investment trust (UIT) format. This future flexibility depends on the intentions and discipline of the board and managers, and could shift if there’s turnover in leadership.
- Invesco Begins Collecting Direct Management Fees: The new format allows Invesco to collect a “unitary management fee” that the trust structure previously didn’t permit. This creates an incentive to grow profits and, potentially, alter expenses down the line, despite the initial fee reduction.
- Board Compensation and Governance Costs: A nine-member board will be introduced, which adds an additional cost layer (director compensation and overhead) that could offset some savings or shift incentives compared to a strictly trustee-based approach.
- Liquidity Risk in Market Downturns: Open-ended funds may be forced to sell portfolio assets at unfavorable prices if a large number of investors redeem shares during periods of stress, potentially impacting performance. The UIT structure allows shares to trade among investors without requiring the sale of underlying assets, a mechanism that some investors value for stability during volatile times.
- Shareholder Risk in Securities Lending: Invesco may expand its securities lending activities under the new structure, and any resulting risks or losses would be borne directly by shareholders, not by Invesco.
- No Guarantee Future Fees Will Remain Lower: While initial projections indicate a 10% reduction in the expense ratio, future changes to fee schedules are possible under the new open-ended structure, subject to board approval.
While many see these risks as manageable, they should be evaluated alongside the promised benefits. It’s important for shareholders to understand both sides before casting a vote.
What major institutional holders think
Major institutions that hold QQQ have generally leaned in support of the conversion vote, viewing the restructuring as beneficial for both operational efficiency and cost reduction. However, the fund has an unusually large retail investor base, making institutional votes influential but insufficient to guarantee passage, which is why Invesco has mounted such an aggressive campaign.
- Institutional Sentiment: Proxy advisory firms and ETF strategists have publicly supported the move, highlighting reduced expense ratios, improved governance via a new board, and enhanced transparency as positives for shareholders. Major institutional holders—including major brokerage platforms, asset managers, and pension funds—are widely expected to vote in favor due to these clear-cut advantages, as their own portfolios will directly benefit from fee savings.
- Voting Weight: Institutions typically vote their shares, but approximately 40–50% of QQQ ownership is held by retail investors, and a majority of the outstanding shares must vote “yes” for the conversion to occur.
- No Institutional Opposition Spotted: As of now, there is no reported campaign of institutional opposition to the change; the proposal is seen industry-wide as a modernization step that aligns QQQ with other large ETFs.
What I think
This change appears to be designed to benefit shareholders by offering lower costs and greater transparency. Despite the potential downsides, it is unlikely to introduce major surprises or large additional risks.
If you agree, I’d suggest voting in favor; however, you won’t be at any disadvantage if you simply ignore the campaign—the fund will continue regardless. Invesco’s push is simply a matter of meeting the voting threshold they need.
Timing of the vote postponed
The original QQQ conversion proxy vote was scheduled for October 24, 2025. After failing to reach a quorum at the original meeting, the vote was postponed to December 5, 2025.
It sounds like the phone calls, emails, snail mail, and text messages will continue for a few more weeks. Or as they say, “the beatings will continue until morale improves.” Maybe casting your vote will stop all the messages. In any case, it’s worth a try.
Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.
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