The Schwab U.S. Dividend Equity ETF (SCHD) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between SCHD and TQQQ? And which fund is better?
The expense ratio of SCHD is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided lower returns than TQQQ over the past 8 years.
In this article, we’ll compare SCHD vs. TQQQ. We’ll look at holdings and risk metrics, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss SCHD’s and TQQQ’s fund composition, industry exposure, and performance and examine how these affect their overall returns.
Summary
| SCHD | TQQQ | |
| Name | Schwab U.S. Dividend Equity ETF | ProShares UltraPro QQQ |
| Category | Large Value | Trading–Leveraged Equity |
| Issuer | Schwab ETFs | ProShares |
| AUM | 26B | 12.41B |
| Avg. Return | 14.80% | 61.22% |
| Div. Yield | 2.89% | 0.0% |
| Expense Ratio | 0.06% | 0.95% |
The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% 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%.
SCHD’s dividend yield is 2.89% higher than that of TQQQ (2.89% vs. 0.0%). Also, SCHD yielded on average 46.42% less per year over the past decade (14.80% vs. 61.22%). The expense ratio of SCHD is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%).
Fund Composition
Industry Exposure
| SCHD | TQQQ | |
| Technology | 16.26% | 0.0% |
| Industrials | 18.05% | 0.0% |
| Energy | 1.87% | 0.0% |
| Communication Services | 4.96% | 0.0% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 12.64% | 0.0% |
| Consumer Defensive | 14.04% | 0.0% |
| Real Estate | 0.0% | 0.0% |
| Financial Services | 21.69% | 0.0% |
| Consumer Cyclical | 8.36% | 0.0% |
| Basic Materials | 2.13% | 0.0% |
The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
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%.
SCHD is 21.69% more exposed to the Financial Services sector than TQQQ (21.69% vs 0.0%). SCHD’s exposure to Industrials and Technology stocks is 18.05% higher and 16.26% higher respectively (18.05% vs. 0.0% and 16.26% vs. 0.0%). In total, Utilities, Energy, and Basic Materials also make up 4.00% more of the fund’s holdings compared to TQQQ (4.00% vs. 0.00%).
Holdings
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
| 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
| SCHD | TQQQ | |
| Mean Return | 0 | 4.65 |
| R-squared | 0 | 83.64 |
| Std. Deviation | 0 | 50.08 |
| Alpha | 0 | 7.29 |
| Beta | 0 | 3.37 |
| Sharpe Ratio | 0 | 1.1 |
| Treynor Ratio | 0 | 15.65 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a R-squared of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Alpha is 0 while SCHD’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Beta of 0.
The ProShares UltraPro QQQ (TQQQ) has a Mean Return of 4.65 with a R-squared of 83.64 and a Beta of 3.37. Its Sharpe Ratio is 1.1 while TQQQ’s Treynor Ratio is 15.65. Furthermore, the fund has a Alpha of 7.29 and a Standard Deviation of 50.08.
SCHD’s Mean Return is 4.65 points lower than that of TQQQ and its R-squared is 83.64 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than TQQQ. The Alpha and Beta of SCHD are 7.29 points lower and 3.37 points lower than TQQQ’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | TQQQ |
| 2020 | 15.11% | 109.85% |
| 2019 | 27.28% | 133.93% |
| 2018 | -5.46% | -19.65% |
| 2017 | 20.88% | 118.65% |
| 2016 | 16.25% | 11.04% |
| 2015 | -0.21% | 17.41% |
| 2014 | 11.66% | 56.82% |
| 2013 | 32.9% | 139.98% |
| 2012 | 11.4% | 51.95% |
| 2011 | 0.0% | -7.77% |
| 2010 | 0.0% | 0.0% |
SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% 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
| Fund | Initial Balance | Final Balance | CAGR |
| SCHD | $10,000 | $28,823 | 14.80% |
| TQQQ | $10,000 | $423,147 | 61.22% |
A $10,000 investment in SCHD would have resulted in a final balance of $28,823. This is a profit of $18,823 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in TQQQ, the end total would have been $423,147. This equates to a $413,147 profit over 8 years and a compound annual growth rate (CAGR) of 61.22%.
SCHD’s CAGR is 46.42 percentage points lower than that of TQQQ and as a result, would have yielded $394,324 less on a $10,000 investment. Thus, SCHD performed worse than TQQQ by 46.42% annually.
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