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SCHB vs. TQQQ: What’s The Difference?

The Schwab U.S. Broad Market ETF (SCHB) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. SCHB is a Schwab ETFs Large Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between SCHB and TQQQ? And which fund is better?

The expense ratio of SCHB is 0.92 percentage points lower than TQQQ’s (0.03% vs. 0.95%). SCHB also has a higher exposure to the technology sector and a lower standard deviation. Overall, SCHB has provided lower returns than TQQQ over the past 10 years.

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

Summary

SCHB TQQQ
Name Schwab U.S. Broad Market ETF ProShares UltraPro QQQ
Category Large Blend Trading–Leveraged Equity
Issuer Schwab ETFs ProShares
AUM 21.44B 12.41B
Avg. Return 14.43% 61.22%
Div. Yield 1.39% 0.0%
Expense Ratio 0.03% 0.95%

The Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.

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%.

SCHB’s dividend yield is 1.39% higher than that of TQQQ (1.39% vs. 0.0%). Also, SCHB yielded on average 46.79% less per year over the past decade (14.43% vs. 61.22%). The expense ratio of SCHB is 0.92 percentage points lower than TQQQ’s (0.03% vs. 0.95%).

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Fund Composition

Industry Exposure

SCHB vs. TQQQ - Industry Exposure

SCHB TQQQ
Technology 24.15% 0.0%
Industrials 9.29% 0.0%
Energy 2.78% 0.0%
Communication Services 10.52% 0.0%
Utilities 2.32% 0.0%
Healthcare 13.37% 0.0%
Consumer Defensive 5.76% 0.0%
Real Estate 3.58% 0.0%
Financial Services 13.88% 0.0%
Consumer Cyclical 11.9% 0.0%
Basic Materials 2.45% 0.0%

The Schwab U.S. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.

SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.

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%.

SCHB is 24.15% more exposed to the Technology sector than TQQQ (24.15% vs 0.0%). SCHB’s exposure to Financial Services and Healthcare stocks is 13.88% higher and 13.37% higher respectively (13.88% vs. 0.0% and 13.37% vs. 0.0%). In total, Basic Materials, Energy, and Real Estate also make up 8.81% more of the fund’s holdings compared to TQQQ (8.81% vs. 0.00%).

Holdings

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
JPMorgan Chase & Co 1.06%

SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.

Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.

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%.

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Risk Analysis

SCHB TQQQ
Mean Return 1.23 4.65
R-squared 99.33 83.64
Std. Deviation 14.12 50.08
Alpha -0.58 7.29
Beta 1.04 3.37
Sharpe Ratio 1 1.1
Treynor Ratio 13.58 15.65

The Schwab U.S. Broad Market ETF (SCHB) has a Mean Return of 1.23 with a Treynor Ratio of 13.58 and a Sharpe Ratio of 1. Its R-squared is 99.33 while SCHB’s Beta is 1.04. Furthermore, the fund has a Alpha of -0.58 and a Standard Deviation of 14.12.

The ProShares UltraPro QQQ (TQQQ) has a Alpha of 7.29 with a Mean Return of 4.65 and a Standard Deviation of 50.08. Its R-squared is 83.64 while TQQQ’s Sharpe Ratio is 1.1. Furthermore, the fund has a Beta of 3.37 and a Treynor Ratio of 15.65.

SCHB’s Mean Return is 3.42 points lower than that of TQQQ and its R-squared is 15.69 points higher. With a Standard Deviation of 14.12, SCHB is slightly less volatile than TQQQ. The Alpha and Beta of SCHB are 7.87 points lower and 2.33 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

SCHB vs. TQQQ - Annual Returns

Year SCHB TQQQ
2020 20.77% 109.85%
2019 30.94% 133.93%
2018 -5.25% -19.65%
2017 21.18% 118.65%
2016 12.56% 11.04%
2015 0.45% 17.41%
2014 12.67% 56.82%
2013 33.37% 139.98%
2012 16.22% 51.95%
2011 1.4% -7.77%
2010 17.1% 0.0%

SCHB had its best year in 2013 with an annual return of 33.37%. SCHB’s worst year over the past decade yielded -5.25% and occurred in 2018. In most years the Schwab U.S. Broad Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.67%, 16.22%, and 17.1% 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

SCHB vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHB $10,000 $36,354 14.43%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in SCHB would have resulted in a final balance of $36,354. This is a profit of $26,354 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.43%.

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%.

SCHB’s CAGR is 46.79 percentage points lower than that of TQQQ and as a result, would have yielded $556,658 less on a $10,000 investment. Thus, SCHB performed worse than TQQQ by 46.79% annually.


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