BSV vs. TQQQ: What’s The Difference?

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between BSV and TQQQ? And which fund is better?

The expense ratio of BSV is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%). BSV is mostly comprised of AAA bonds while TQQQ has a high exposure to the technology sector. Overall, BSV has provided lower returns than TQQQ over the past ten years.

In this article, we’ll compare BSV vs. TQQQ. We’ll look at holdings and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss BSV’s and TQQQ’s performance, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

BSV TQQQ
Name Vanguard Short-Term Bond Index Fund ETF Shares ProShares UltraPro QQQ
Category Short-Term Bond Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 67.71B 12.41B
Avg. Return 2.27% 61.22%
Div. Yield 1.48% 0.0%
Expense Ratio 0.05% 0.95%

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.

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%.

BSV’s dividend yield is 1.48% higher than that of TQQQ (1.48% vs. 0.0%). Also, BSV yielded on average 58.95% less per year over the past decade (2.27% vs. 61.22%). The expense ratio of BSV is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%).

Fund Composition

Holdings

BSV - Holdings

BSV Bond Sectors Weight
AAA 71.65%
BBB 13.08%
A 11.95%
AA 3.28%
Others 0.03%
Below B 0.01%
B 0.0%
BB 0.0%
US Government 0.0%

BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.

TQQQ - Holdings

TQQQ Holdings Weight
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%
Apple Inc 7.49%
Microsoft Corp 6.69%
Nasdaq 100 Index Swap Credit Suisse International 5.9%
Amazon.com Inc 5.68%

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%.

Risk Analysis

BSV TQQQ
Mean Return 0.16 4.65
R-squared 78.38 83.64
Std. Deviation 1.33 50.08
Alpha 0.21 7.29
Beta 0.38 3.37
Sharpe Ratio 0.98 1.1
Treynor Ratio 3.33 15.65

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Standard Deviation of 1.33 with a Mean Return of 0.16 and a R-squared of 78.38. Its Treynor Ratio is 3.33 while BSV’s Beta is 0.38. Furthermore, the fund has a Alpha of 0.21 and a Sharpe Ratio of 0.98.

The ProShares UltraPro QQQ (TQQQ) has a R-squared of 83.64 with a Treynor Ratio of 15.65 and a Beta of 3.37. Its Sharpe Ratio is 1.1 while TQQQ’s Mean Return is 4.65. Furthermore, the fund has a Standard Deviation of 50.08 and a Alpha of 7.29.

BSV’s Mean Return is 4.49 points lower than that of TQQQ and its R-squared is 5.26 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than TQQQ. The Alpha and Beta of BSV are 7.08 points lower and 2.99 points lower than TQQQ’s Alpha and Beta.

Performance

Annual Returns

BSV vs. TQQQ - Annual Returns

Year BSV TQQQ
2020 4.67% 109.85%
2019 4.92% 133.93%
2018 1.34% -19.65%
2017 1.2% 118.65%
2016 1.42% 11.04%
2015 0.92% 17.41%
2014 1.32% 56.82%
2013 0.17% 139.98%
2012 1.98% 51.95%
2011 3.04% -7.77%
2010 4.0% 0.0%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% 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.

Portfolio Growth

BSV vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $12,294 2.27%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in BSV would have resulted in a final balance of $12,294. This is a profit of $2,294 over 10 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

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%.

BSV’s CAGR is 58.95 percentage points lower than that of TQQQ and as a result, would have yielded $580,718 less on a $10,000 investment. Thus, BSV performed worse than TQQQ by 58.95% annually.


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