IEFA vs. TQQQ: What’s The Difference?

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

The expense ratio of IEFA is 0.88 percentage points lower than TQQQ’s (0.07% vs. 0.95%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than TQQQ over the past ten years.

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

Summary

IEFA TQQQ
Name iShares Core MSCI EAFE ETF ProShares UltraPro QQQ
Category Foreign Large Blend Trading–Leveraged Equity
Issuer iShares ProShares
AUM 95.78B 12.41B
Avg. Return 5.79% 61.22%
Div. Yield 2.28% 0.0%
Expense Ratio 0.07% 0.95%

The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.

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%.

IEFA’s dividend yield is 2.28% higher than that of TQQQ (2.28% vs. 0.0%). Also, IEFA yielded on average 55.43% less per year over the past decade (5.79% vs. 61.22%). The expense ratio of IEFA is 0.88 percentage points lower than TQQQ’s (0.07% vs. 0.95%).

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Fund Composition

Industry Exposure

IEFA vs. TQQQ - Industry Exposure

IEFA TQQQ
Technology 9.81% 0.0%
Industrials 16.32% 0.0%
Energy 3.19% 0.0%
Communication Services 5.53% 0.0%
Utilities 3.25% 0.0%
Healthcare 12.01% 0.0%
Consumer Defensive 9.78% 0.0%
Real Estate 4.31% 0.0%
Financial Services 15.91% 0.0%
Consumer Cyclical 11.96% 0.0%
Basic Materials 7.93% 0.0%

The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.

IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, and 12.01%.

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%.

IEFA is 16.32% more exposed to the Industrials sector than TQQQ (16.32% vs 0.0%). IEFA’s exposure to Financial Services and Healthcare stocks is 15.91% higher and 12.01% higher respectively (15.91% vs. 0.0% and 12.01% vs. 0.0%). In total, Utilities, Real Estate, and Communication Services also make up 13.09% more of the fund’s holdings compared to TQQQ (13.09% vs. 0.00%).

Holdings

IEFA - Holdings

IEFA Holdings Weight
Nestle SA 1.77%
ASML Holding NV 1.43%
Roche Holding AG 1.31%
LVMH Moet Hennessy Louis Vuitton SE 1.08%
Novartis AG 1.0%
Toyota Motor Corp 0.92%
AstraZeneca PLC 0.78%
Unilever PLC 0.76%
AIA Group Ltd 0.74%
SAP SE 0.73%

IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.

Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.

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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Performance

Annual Returns

IEFA vs. TQQQ - Annual Returns

Year IEFA TQQQ
2020 8.55% 109.85%
2019 22.67% 133.93%
2018 -14.2% -19.65%
2017 26.42% 118.65%
2016 1.36% 11.04%
2015 0.53% 17.41%
2014 -4.82% 56.82%
2013 23.73% 139.98%
2012 0.0% 51.95%
2011 0.0% -7.77%
2010 0.0% 0.0%

IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% 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

IEFA vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEFA $10,000 $14,008 5.79%
TQQQ $10,000 $176,325 61.22%

A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.

With a $10,000 investment in TQQQ, the end total would have been $176,325. This equates to a $166,325 profit over 7 years and a compound annual growth rate (CAGR) of 61.22%.

IEFA’s CAGR is 55.43 percentage points lower than that of TQQQ and as a result, would have yielded $162,317 less on a $10,000 investment. Thus, IEFA performed worse than TQQQ by 55.43% annually.


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