The Schwab U.S. TIPS ETF (SCHP) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between SCHP and TQQQ? And which fund is better?
The expense ratio of SCHP is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%). SCHP is mostly comprised of AAA bonds while TQQQ has a high exposure to the technology sector. Overall, SCHP has provided lower returns than TQQQ over the past 10 years.
In this article, we’ll compare SCHP vs. TQQQ. We’ll look at annual returns and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss SCHP’s and TQQQ’s performance, holdings, and industry exposure and examine how these affect their overall returns.
|Name||Schwab U.S. TIPS ETF||ProShares UltraPro QQQ|
|Category||Inflation-Protected Bond||Trading–Leveraged Equity|
The Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
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%.
SCHP’s dividend yield is 1.97% higher than that of TQQQ (1.97% vs. 0.0%). Also, SCHP yielded on average 57.31% less per year over the past decade (3.92% vs. 61.22%). The expense ratio of SCHP is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%).
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|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
|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%.
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The Schwab U.S. TIPS ETF (SCHP) has a Alpha of -0.5 with a Sharpe Ratio of 0.64 and a Beta of 1.17. Its Treynor Ratio is 2.31 while SCHP’s Standard Deviation is 4.32. Furthermore, the fund has a R-squared of 66.16 and a Mean Return of 0.28.
The ProShares UltraPro QQQ (TQQQ) has a Beta of 3.37 with a Alpha of 7.29 and a Sharpe Ratio of 1.1. Its Mean Return is 4.65 while TQQQ’s R-squared is 83.64. Furthermore, the fund has a Standard Deviation of 50.08 and a Treynor Ratio of 15.65.
SCHP’s Mean Return is 4.37 points lower than that of TQQQ and its R-squared is 17.48 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than TQQQ. The Alpha and Beta of SCHP are 7.79 points lower and 2.20 points lower than TQQQ’s Alpha and Beta.
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SCHP had its best year in 2011 with an annual return of 13.38%. SCHP’s worst year over the past decade yielded -8.66% and occurred in 2013. In most years the Schwab U.S. TIPS ETF provided moderate returns such as in 2017, 2014, and 2016 where annual returns amounted to 2.95%, 3.56%, and 4.6% 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 SCHP would have resulted in a final balance of $14,418. This is a profit of $4,418 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.92%.
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%.
SCHP’s CAGR is 57.31 percentage points lower than that of TQQQ and as a result, would have yielded $578,594 less on a $10,000 investment. Thus, SCHP performed worse than TQQQ by 57.31% annually.
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