The iShares Core MSCI Emerging Markets ETF (IEMG) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between IEMG and TQQQ? And which fund is better?
The expense ratio of IEMG is 0.84 percentage points lower than TQQQ’s (0.11% vs. 0.95%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare IEMG vs. TQQQ. We’ll look at fund composition and performance, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss IEMG’s and TQQQ’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
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Summary
| IEMG | TQQQ | |
| Name | iShares Core MSCI Emerging Markets ETF | ProShares UltraPro QQQ |
| Category | Diversified Emerging Mkts | Trading–Leveraged Equity |
| Issuer | iShares | ProShares |
| AUM | 83.68B | 12.41B |
| Avg. Return | 7.41% | 61.22% |
| Div. Yield | 1.78% | 0.0% |
| Expense Ratio | 0.11% | 0.95% |
The iShares Core MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.
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%.
IEMG’s dividend yield is 1.78% higher than that of TQQQ (1.78% vs. 0.0%). Also, IEMG yielded on average 53.81% less per year over the past decade (7.41% vs. 61.22%). The expense ratio of IEMG is 0.84 percentage points lower than TQQQ’s (0.11% vs. 0.95%).
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Fund Composition
Industry Exposure
| IEMG | TQQQ | |
| Technology | 20.44% | 0.0% |
| Industrials | 5.92% | 0.0% |
| Energy | 4.71% | 0.0% |
| Communication Services | 11.41% | 0.0% |
| Utilities | 2.13% | 0.0% |
| Healthcare | 5.73% | 0.0% |
| Consumer Defensive | 5.68% | 0.0% |
| Real Estate | 2.75% | 0.0% |
| Financial Services | 16.9% | 0.0% |
| Consumer Cyclical | 15.67% | 0.0% |
| Basic Materials | 8.64% | 0.0% |
The iShares Core MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.
IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.
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%.
IEMG is 20.44% more exposed to the Technology sector than TQQQ (20.44% vs 0.0%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 16.90% higher and 15.67% higher respectively (16.9% vs. 0.0% and 15.67% vs. 0.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 13.14% more of the fund’s holdings compared to TQQQ (13.14% vs. 0.00%).
Holdings
| IEMG Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 5.37% |
| Tencent Holdings Ltd | 4.42% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.38% |
| Samsung Electronics Co Ltd | 3.49% |
| Meituan | 1.52% |
| Naspers Ltd Class N | 0.93% |
| Vale SA | 0.91% |
| Reliance Industries Ltd Shs Dematerialised | 0.83% |
| China Construction Bank Corp Class H | 0.77% |
| Infosys Ltd | 0.74% |
IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.
Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.
| 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
| IEMG | 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 MSCI Emerging Markets ETF (IEMG) has a Treynor Ratio of 0 with a Alpha of 0 and a Standard Deviation of 0. Its R-squared is 0 while IEMG’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.
The ProShares UltraPro QQQ (TQQQ) has a R-squared of 83.64 with a Alpha of 7.29 and a Sharpe Ratio of 1.1. Its Beta is 3.37 while TQQQ’s Standard Deviation is 50.08. Furthermore, the fund has a Mean Return of 4.65 and a Treynor Ratio of 15.65.
IEMG’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, IEMG is slightly less volatile than TQQQ. The Alpha and Beta of IEMG are 7.29 points lower and 3.37 points lower than TQQQ’s Alpha and Beta.
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Performance
Annual Returns
| Year | IEMG | TQQQ |
| 2020 | 18.18% | 109.85% |
| 2019 | 17.5% | 133.93% |
| 2018 | -14.69% | -19.65% |
| 2017 | 36.78% | 118.65% |
| 2016 | 9.98% | 11.04% |
| 2015 | -13.86% | 17.41% |
| 2014 | -2.04% | 56.82% |
| 2013 | -2.16% | 139.98% |
| 2012 | 0.0% | 51.95% |
| 2011 | 0.0% | -7.77% |
| 2010 | 0.0% | 0.0% |
IEMG had its best year in 2017 with an annual return of 36.78%. IEMG’s worst year over the past decade yielded -14.69% and occurred in 2018. In most years the iShares Core MSCI Emerging Markets 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
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| TQQQ | $10,000 | $176,325 | 61.22% |
A $10,000 investment in IEMG would have resulted in a final balance of $15,037. This is a profit of $5,037 over 7 years and amounts to a compound annual growth rate (CAGR) of 7.41%.
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%.
IEMG’s CAGR is 53.81 percentage points lower than that of TQQQ and as a result, would have yielded $161,288 less on a $10,000 investment. Thus, IEMG performed worse than TQQQ by 53.81% annually.
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