SCHX vs. TQQQ: What’s The Difference?

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

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

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

Summary

SCHX TQQQ
Name Schwab U.S. Large-Cap ETF ProShares UltraPro QQQ
Category Large Blend Trading–Leveraged Equity
Issuer Schwab ETFs ProShares
AUM 30.89B 12.41B
Avg. Return 14.60% 61.22%
Div. Yield 1.41% 0.0%
Expense Ratio 0.03% 0.95%

The Schwab U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% 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%.

SCHX’s dividend yield is 1.41% higher than that of TQQQ (1.41% vs. 0.0%). Also, SCHX yielded on average 46.62% less per year over the past decade (14.60% vs. 61.22%). The expense ratio of SCHX is 0.92 percentage points lower than TQQQ’s (0.03% vs. 0.95%).

Fund Composition

Industry Exposure

SCHX vs. TQQQ - Industry Exposure

SCHX TQQQ
Technology 25.13% 0.0%
Industrials 8.65% 0.0%
Energy 2.72% 0.0%
Communication Services 11.26% 0.0%
Utilities 2.37% 0.0%
Healthcare 13.04% 0.0%
Consumer Defensive 5.97% 0.0%
Real Estate 3.13% 0.0%
Financial Services 13.82% 0.0%
Consumer Cyclical 11.63% 0.0%
Basic Materials 2.28% 0.0%

The Schwab U.S. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

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%.

SCHX is 25.13% more exposed to the Technology sector than TQQQ (25.13% vs 0.0%). SCHX’s exposure to Financial Services and Healthcare stocks is 13.82% higher and 13.04% higher respectively (13.82% vs. 0.0% and 13.04% vs. 0.0%). In total, Utilities, Energy, and Real Estate also make up 8.22% more of the fund’s holdings compared to TQQQ (8.22% vs. 0.00%).

Holdings

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
JPMorgan Chase & Co 1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

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%.

Risk Analysis

SCHX TQQQ
Mean Return 1.24 4.65
R-squared 99.83 83.64
Std. Deviation 13.8 50.08
Alpha -0.14 7.29
Beta 1.02 3.37
Sharpe Ratio 1.03 1.1
Treynor Ratio 14.06 15.65

The Schwab U.S. Large-Cap ETF (SCHX) has a Treynor Ratio of 14.06 with a Beta of 1.02 and a Mean Return of 1.24. Its Standard Deviation is 13.8 while SCHX’s R-squared is 99.83. Furthermore, the fund has a Sharpe Ratio of 1.03 and a Alpha of -0.14.

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

SCHX’s Mean Return is 3.41 points lower than that of TQQQ and its R-squared is 16.19 points higher. With a Standard Deviation of 13.8, SCHX is slightly less volatile than TQQQ. The Alpha and Beta of SCHX are 7.43 points lower and 2.35 points lower than TQQQ’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. TQQQ - Annual Returns

Year SCHX TQQQ
2020 20.9% 109.85%
2019 31.4% 133.93%
2018 -4.52% -19.65%
2017 21.91% 118.65%
2016 11.78% 11.04%
2015 1.02% 17.41%
2014 13.33% 56.82%
2013 32.54% 139.98%
2012 16.06% 51.95%
2011 1.61% -7.77%
2010 15.88% 0.0%

SCHX had its best year in 2013 with an annual return of 32.54%. SCHX’s worst year over the past decade yielded -4.52% and occurred in 2018. In most years the Schwab U.S. Large-Cap ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.33%, 15.88%, and 16.06% 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

SCHX vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $36,987 14.60%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in SCHX would have resulted in a final balance of $36,987. This is a profit of $26,987 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

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%.

SCHX’s CAGR is 46.62 percentage points lower than that of TQQQ and as a result, would have yielded $556,025 less on a $10,000 investment. Thus, SCHX performed worse than TQQQ by 46.62% annually.


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