DGRO vs. TQQQ: What’s The Difference?

The iShares Core Dividend Growth ETF (DGRO) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between DGRO and TQQQ? And which fund is better?

The expense ratio of DGRO is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%). DGRO also has a higher exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided lower returns than TQQQ over the past 6 years.

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

Summary

DGRO TQQQ
Name iShares Core Dividend Growth ETF ProShares UltraPro QQQ
Category Large Value Trading–Leveraged Equity
Issuer iShares ProShares
AUM 20B 12.41B
Avg. Return 12.46% 61.22%
Div. Yield 2.04% 0.0%
Expense Ratio 0.08% 0.95%

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

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%.

DGRO’s dividend yield is 2.04% higher than that of TQQQ (2.04% vs. 0.0%). Also, DGRO yielded on average 48.76% less per year over the past decade (12.46% vs. 61.22%). The expense ratio of DGRO is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%).

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Fund Composition

Industry Exposure

DGRO vs. TQQQ - Industry Exposure

DGRO TQQQ
Technology 18.98% 0.0%
Industrials 12.52% 0.0%
Energy 0.11% 0.0%
Communication Services 4.53% 0.0%
Utilities 7.34% 0.0%
Healthcare 17.55% 0.0%
Consumer Defensive 10.24% 0.0%
Real Estate 0.0% 0.0%
Financial Services 18.47% 0.0%
Consumer Cyclical 7.42% 0.0%
Basic Materials 2.83% 0.0%

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

The ProShares UltraPro QQQ (TQQQ) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

TQQQ’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

DGRO is 18.98% more exposed to the Technology sector than TQQQ (18.98% vs 0.0%). DGRO’s exposure to Financial Services and Healthcare stocks is 18.47% higher and 17.55% higher respectively (18.47% vs. 0.0% and 17.55% vs. 0.0%). In total, Energy, Basic Materials, and Communication Services also make up 7.47% more of the fund’s holdings compared to TQQQ (7.47% vs. 0.00%).

Holdings

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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%.

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Risk Analysis

DGRO TQQQ
Mean Return 0 4.65
R-squared 0 83.64
Std. Deviation 0 50.08
Alpha 0 7.29
Beta 0 3.37
Sharpe Ratio 0 1.1
Treynor Ratio 0 15.65

The iShares Core Dividend Growth ETF (DGRO) has a Alpha of 0 with a Beta of 0 and a Mean Return of 0. Its R-squared is 0 while DGRO’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.

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

DGRO’s Mean Return is 4.65 points lower than that of TQQQ and its R-squared is 83.64 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than TQQQ. The Alpha and Beta of DGRO are 7.29 points lower and 3.37 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

DGRO vs. TQQQ - Annual Returns

Year DGRO TQQQ
2020 9.47% 109.85%
2019 30.02% 133.93%
2018 -2.24% -19.65%
2017 22.84% 118.65%
2016 15.27% 11.04%
2015 -0.62% 17.41%
2014 0.0% 56.82%
2013 0.0% 139.98%
2012 0.0% 51.95%
2011 0.0% -7.77%
2010 0.0% 0.0%

DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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

DGRO vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DGRO $10,000 $19,580 12.46%
TQQQ $10,000 $112,438 61.22%

A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.

With a $10,000 investment in TQQQ, the end total would have been $112,438. This equates to a $102,438 profit over 6 years and a compound annual growth rate (CAGR) of 61.22%.

DGRO’s CAGR is 48.76 percentage points lower than that of TQQQ and as a result, would have yielded $92,858 less on a $10,000 investment. Thus, DGRO performed worse than TQQQ by 48.76% annually.


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