IWB vs. TQQQ: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between IWB and TQQQ? And which fund is better?

The expense ratio of IWB is 0.80 percentage points lower than TQQQ’s (0.15% vs. 0.95%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided lower returns than TQQQ over the past ten years.

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

Summary

IWB TQQQ
Name iShares Russell 1000 ETF ProShares UltraPro QQQ
Category Large Blend Trading–Leveraged Equity
Issuer iShares ProShares
AUM 30.54B 12.41B
Avg. Return 14.64% 61.22%
Div. Yield 1.14% 0.0%
Expense Ratio 0.15% 0.95%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 1.14% higher than that of TQQQ (1.14% vs. 0.0%). Also, IWB yielded on average 46.59% less per year over the past decade (14.64% vs. 61.22%). The expense ratio of IWB is 0.80 percentage points lower than TQQQ’s (0.15% vs. 0.95%).

Fund Composition

Industry Exposure

IWB vs. TQQQ - Industry Exposure

IWB TQQQ
Technology 25.33% 0.0%
Industrials 8.88% 0.0%
Energy 2.44% 0.0%
Communication Services 10.83% 0.0%
Utilities 2.36% 0.0%
Healthcare 13.35% 0.0%
Consumer Defensive 5.97% 0.0%
Real Estate 3.34% 0.0%
Financial Services 13.64% 0.0%
Consumer Cyclical 11.85% 0.0%
Basic Materials 2.02% 0.0%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 25.33% more exposed to the Technology sector than TQQQ (25.33% vs 0.0%). IWB’s exposure to Financial Services and Healthcare stocks is 13.64% higher and 13.35% higher respectively (13.64% vs. 0.0% and 13.35% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 8.14% more of the fund’s holdings compared to TQQQ (8.14% vs. 0.00%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

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

IWB TQQQ
Mean Return 1.27 4.65
R-squared 99.73 83.64
Std. Deviation 13.87 50.08
Alpha -0.38 7.29
Beta 1.02 3.37
Sharpe Ratio 1.05 1.1
Treynor Ratio 14.31 15.65

The iShares Russell 1000 ETF (IWB) has a Mean Return of 1.27 with a Alpha of -0.38 and a R-squared of 99.73. Its Standard Deviation is 13.87 while IWB’s Beta is 1.02. Furthermore, the fund has a Sharpe Ratio of 1.05 and a Treynor Ratio of 14.31.

The ProShares UltraPro QQQ (TQQQ) has a Standard Deviation of 50.08 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 R-squared of 83.64 and a Alpha of 7.29.

IWB’s Mean Return is 3.38 points lower than that of TQQQ and its R-squared is 16.09 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than TQQQ. The Alpha and Beta of IWB are 7.67 points lower and 2.35 points lower than TQQQ’s Alpha and Beta.

Performance

Annual Returns

IWB vs. TQQQ - Annual Returns

Year IWB TQQQ
2020 20.8% 109.85%
2019 31.26% 133.93%
2018 -4.91% -19.65%
2017 21.53% 118.65%
2016 11.91% 11.04%
2015 0.82% 17.41%
2014 13.08% 56.82%
2013 32.93% 139.98%
2012 16.27% 51.95%
2011 1.36% -7.77%
2010 15.94% 0.0%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $36,624 14.64%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in IWB would have resulted in a final balance of $36,624. This is a profit of $26,624 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 46.59 percentage points lower than that of TQQQ and as a result, would have yielded $556,388 less on a $10,000 investment. Thus, IWB performed worse than TQQQ by 46.59% annually.


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