The iShares Core U.S. Aggregate Bond ETF (AGG) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between AGG and TQQQ? And which fund is better?
The expense ratio of AGG is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%). AGG is mostly comprised of AAA bonds while TQQQ has a high exposure to the technology sector. Overall, AGG has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare AGG vs. TQQQ. We’ll look at holdings and industry exposure, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss AGG’s and TQQQ’s annual returns, performance, and risk metrics and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||ProShares UltraPro QQQ|
|Category||Intermediate-Term Bond||Trading–Leveraged Equity|
The iShares Core U.S. Aggregate Bond ETF (AGG) is a Intermediate-Term Bond fund that is issued by iShares. It currently has 88.8B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.95% with an expense ratio of 0.04%.
The ProShares UltraPro QQQ (TQQQ) is a Trading–Leveraged Equity fund that is issued by ProShares. It currently has 12.41B total assets under management and has yielded an average annual return of 61.22% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.95%.
AGG’s dividend yield is 1.95% higher than that of TQQQ (1.95% vs. 0.0%). Also, AGG yielded on average 57.18% less per year over the past decade (4.04% vs. 61.22%). The expense ratio of AGG is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%).
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|AGG Bond Sectors||Weight|
AGG’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 68.92%, 15.38%, 11.16%, 2.92%, and 1.63%. The fund is less weighted towards Below B (0.0%), B (0.0%), and BB (0.0%) rated bonds.
|Nasdaq 100 Index Swap Goldman Sachs International||45.11%|
|Nasdaq 100 Index Swap Societe Generale||44.73%|
|Nasdaq 100 Index Swap Bnp Paribas||38.05%|
|Nasdaq 100 Index Swap Bank Of America Na||31.53%|
|Nasdaq 100 Index Swap Citibank Na||31.49%|
|Nasdaq 100 Index Swap Jp Morgan Securities||26.2%|
|Nasdaq 100 Index Swap Credit Suisse International||5.9%|
TQQQ’s Top Holdings are Nasdaq 100 Index Swap Goldman Sachs International, Nasdaq 100 Index Swap Societe Generale, Nasdaq 100 Index Swap Bnp Paribas, Nasdaq 100 Index Swap Bank Of America Na, and Nasdaq 100 Index Swap Citibank Na at 45.11%, 44.73%, 38.05%, 31.53%, and 31.49%.
Nasdaq 100 Index Swap Jp Morgan Securities (26.2%), Apple Inc (7.49%), and Microsoft Corp (6.69%) have a slightly smaller but still significant weight. Nasdaq 100 Index Swap Credit Suisse International and Amazon.com Inc are also represented in the TQQQ’s holdings at 5.9% and 5.68%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Standard Deviation of 3.03 with a Sharpe Ratio of 0.9 and a Beta of 1.01. Its R-squared is 99.96 while AGG’s Mean Return is 0.28. Furthermore, the fund has a Alpha of -0.08 and a Treynor Ratio of 2.7.
The ProShares UltraPro QQQ (TQQQ) has a Standard Deviation of 50.08 with a Alpha of 7.29 and a Sharpe Ratio of 1.1. Its Mean Return is 4.65 while TQQQ’s Treynor Ratio is 15.65. Furthermore, the fund has a Beta of 3.37 and a R-squared of 83.64.
AGG’s Mean Return is 4.37 points lower than that of TQQQ and its R-squared is 16.32 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than TQQQ. The Alpha and Beta of AGG are 7.37 points lower and 2.36 points lower than TQQQ’s Alpha and Beta.
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AGG had its best year in 2019 with an annual return of 8.68%. AGG’s worst year over the past decade yielded -2.15% and occurred in 2013. In most years the iShares Core U.S. Aggregate Bond ETF provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.53%, 4.04%, and 6.04% respectively.
The year 2013 was the strongest year for TQQQ, returning 139.98% on an annual basis. The poorest year for TQQQ in the last ten years was 2018, with a yield of -19.65%. Most years the ProShares UltraPro QQQ has given investors modest returns, such as in 2015, 2012, and 2014, when gains were 17.41%, 51.95%, and 56.82% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in AGG would have resulted in a final balance of $14,457. This is a profit of $4,457 over 10 years and amounts to a compound annual growth rate (CAGR) of 4.04%.
With a $10,000 investment in TQQQ, the end total would have been $593,012. This equates to a $583,012 profit over 10 years and a compound annual growth rate (CAGR) of 61.22%.
AGG’s CAGR is 57.18 percentage points lower than that of TQQQ and as a result, would have yielded $578,555 less on a $10,000 investment. Thus, AGG performed worse than TQQQ by 57.18% annually.
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