The iShares Russell 2000 ETF (IWM) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between IWM and TQQQ? And which fund is better?
The expense ratio of IWM is 0.76 percentage points lower than TQQQ’s (0.19% vs. 0.95%). IWM also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, IWM has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare IWM vs. TQQQ. We’ll look at fund composition and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss IWM’s and TQQQ’s portfolio growth, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||ProShares UltraPro QQQ|
|Category||Small Blend||Trading–Leveraged Equity|
The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.
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%.
IWM’s dividend yield is 0.86% higher than that of TQQQ (0.86% vs. 0.0%). Also, IWM yielded on average 47.70% less per year over the past decade (13.52% vs. 61.22%). The expense ratio of IWM is 0.76 percentage points lower than TQQQ’s (0.19% vs. 0.95%).
The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.
IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.
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%.
IWM is 20.30% more exposed to the Healthcare sector than TQQQ (20.3% vs 0.0%). IWM’s exposure to Industrials and Technology stocks is 14.78% higher and 14.21% higher respectively (14.78% vs. 0.0% and 14.21% vs. 0.0%). In total, Consumer Defensive, Basic Materials, and Energy also make up 11.13% more of the fund’s holdings compared to TQQQ (11.13% vs. 0.00%).
|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.
Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.
|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 Russell 2000 ETF (IWM) has a Standard Deviation of 18.87 with a Mean Return of 1.12 and a Treynor Ratio of 9.56. Its Sharpe Ratio is 0.68 while IWM’s R-squared is 77.73. Furthermore, the fund has a Beta of 1.23 and a Alpha of -5.12.
The ProShares UltraPro QQQ (TQQQ) has a R-squared of 83.64 with a Sharpe Ratio of 1.1 and a Treynor Ratio of 15.65. Its Alpha is 7.29 while TQQQ’s Beta is 3.37. Furthermore, the fund has a Mean Return of 4.65 and a Standard Deviation of 50.08.
IWM’s Mean Return is 3.53 points lower than that of TQQQ and its R-squared is 5.91 points lower. With a Standard Deviation of 18.87, IWM is slightly less volatile than TQQQ. The Alpha and Beta of IWM are 12.41 points lower and 2.14 points lower than TQQQ’s Alpha and Beta.
IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% 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 IWM would have resulted in a final balance of $28,941. This is a profit of $18,941 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
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%.
IWM’s CAGR is 47.70 percentage points lower than that of TQQQ and as a result, would have yielded $564,071 less on a $10,000 investment. Thus, IWM performed worse than TQQQ by 47.70% annually.
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