The iShares Preferred and Income Securities ETF (PFF) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. PFF is a iShares Preferred Stock fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between PFF and TQQQ? And which fund is better?
The expense ratio of PFF is 0.49 percentage points lower than TQQQ’s (0.46% vs. 0.95%). PFF also has a higher exposure to the utilities sector and a lower standard deviation. Overall, PFF has provided lower returns than TQQQ over the past 10 years.
In this article, we’ll compare PFF vs. TQQQ. We’ll look at risk metrics and industry exposure, as well as at their holdings and fund composition. Moreover, I’ll also discuss PFF’s and TQQQ’s annual returns, performance, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Preferred and Income Securities ETF||ProShares UltraPro QQQ|
|Category||Preferred Stock||Trading–Leveraged Equity|
The iShares Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.
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%.
PFF’s dividend yield is 4.47% higher than that of TQQQ (4.47% vs. 0.0%). Also, PFF yielded on average 54.32% less per year over the past decade (6.90% vs. 61.22%). The expense ratio of PFF is 0.49 percentage points lower than TQQQ’s (0.46% vs. 0.95%).
The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.
PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.
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%.
PFF is 81.81% more exposed to the Utilities sector than TQQQ (81.81% vs 0.0%). PFF’s exposure to Industrials and Basic Materials stocks is 10.27% higher and 3.74% higher respectively (10.27% vs. 0.0% and 3.74% vs. 0.0%). In total, Financial Services, Consumer Defensive, and Communication Services also make up 0.00% less of the fund’s holdings compared to TQQQ (0.00% vs. 0.00%).
|Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A||2.54%|
|BlackRock Cash Funds Treasury SL Agency||2.3%|
|Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-||1.79%|
|Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-||1.49%|
|ArcelorMittal S.A. 5.5%||1.36%|
|Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A||1.35%|
|Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B||1.14%|
|NextEra Energy Inc Unit||1.12%|
|Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4||1.08%|
|Avantor Inc Ser A||0.99%|
PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.
|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 Preferred and Income Securities ETF (PFF) has a Mean Return of 0.52 with a Treynor Ratio of 6.79 and a Beta of 0.81. Its Standard Deviation is 7.87 while PFF’s Sharpe Ratio is 0.72. Furthermore, the fund has a R-squared of 9.39 and a Alpha of 3.45.
The ProShares UltraPro QQQ (TQQQ) has a Mean Return of 4.65 with a Alpha of 7.29 and a Beta of 3.37. Its Sharpe Ratio is 1.1 while TQQQ’s R-squared is 83.64. Furthermore, the fund has a Treynor Ratio of 15.65 and a Standard Deviation of 50.08.
PFF’s Mean Return is 4.13 points lower than that of TQQQ and its R-squared is 74.25 points lower. With a Standard Deviation of 7.87, PFF is slightly less volatile than TQQQ. The Alpha and Beta of PFF are 3.84 points lower and 2.56 points lower than TQQQ’s Alpha and Beta.
PFF had its best year in 2012 with an annual return of 18.25%. PFF’s worst year over the past decade yielded -4.77% and occurred in 2018. In most years the iShares Preferred and Income Securities ETF provided moderate returns such as in 2015, 2020, and 2017 where annual returns amounted to 4.62%, 7.94%, and 8.33% 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 PFF would have resulted in a final balance of $17,789. This is a profit of $7,789 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.90%.
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%.
PFF’s CAGR is 54.32 percentage points lower than that of TQQQ and as a result, would have yielded $575,223 less on a $10,000 investment. Thus, PFF performed worse than TQQQ by 54.32% annually.
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