The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between IGSB and TQQQ? And which fund is better?
The expense ratio of IGSB is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%). IGSB is mostly comprised of BBB bonds while TQQQ has a high exposure to the technology sector. Overall, IGSB has provided lower returns than TQQQ over the past 10 years.
In this article, we’ll compare IGSB vs. TQQQ. We’ll look at holdings and portfolio growth, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss IGSB’s and TQQQ’s fund composition, performance, and industry exposure and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||ProShares UltraPro QQQ|
|Category||Short-Term Bond||Trading–Leveraged Equity|
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
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%.
IGSB’s dividend yield is 2.02% higher than that of TQQQ (2.02% vs. 0.0%). Also, IGSB yielded on average 58.71% less per year over the past decade (2.51% vs. 61.22%). The expense ratio of IGSB is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%).
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (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%.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Beta of 0.34 with a Alpha of 0.69 and a Treynor Ratio of 4.82. Its R-squared is 26.13 while IGSB’s Mean Return is 0.19. Furthermore, the fund has a Standard Deviation of 2 and a Sharpe Ratio of 0.82.
The ProShares UltraPro QQQ (TQQQ) has a Standard Deviation of 50.08 with a Sharpe Ratio of 1.1 and a Alpha of 7.29. Its Beta is 3.37 while TQQQ’s Mean Return is 4.65. Furthermore, the fund has a R-squared of 83.64 and a Treynor Ratio of 15.65.
IGSB’s Mean Return is 4.46 points lower than that of TQQQ and its R-squared is 57.51 points lower. With a Standard Deviation of 2, IGSB is slightly less volatile than TQQQ. The Alpha and Beta of IGSB are 6.60 points lower and 3.03 points lower than TQQQ’s Alpha and Beta.
IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% 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 IGSB would have resulted in a final balance of $12,637. This is a profit of $2,637 over 10 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
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%.
IGSB’s CAGR is 58.71 percentage points lower than that of TQQQ and as a result, would have yielded $580,375 less on a $10,000 investment. Thus, IGSB performed worse than TQQQ by 58.71% annually.
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