SDY vs. TQQQ: What’s The Difference?

The SPDR S&P Dividend ETF (SDY) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. SDY is a SPDR State Street Global Advisors Large Value fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between SDY and TQQQ? And which fund is better?

The expense ratio of SDY is 0.60 percentage points lower than TQQQ’s (0.35% vs. 0.95%). SDY also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SDY has provided lower returns than TQQQ over the past 10 years.

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

Summary

SDY TQQQ
Name SPDR S&P Dividend ETF ProShares UltraPro QQQ
Category Large Value Trading–Leveraged Equity
Issuer SPDR State Street Global Advisors ProShares
AUM 19.67B 12.41B
Avg. Return 12.44% 61.22%
Div. Yield 2.65% 0.0%
Expense Ratio 0.35% 0.95%

The SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

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%.

SDY’s dividend yield is 2.65% higher than that of TQQQ (2.65% vs. 0.0%). Also, SDY yielded on average 48.78% less per year over the past decade (12.44% vs. 61.22%). The expense ratio of SDY is 0.60 percentage points lower than TQQQ’s (0.35% vs. 0.95%).

Fund Composition

Industry Exposure

SDY vs. TQQQ - Industry Exposure

SDY TQQQ
Technology 2.0% 0.0%
Industrials 15.89% 0.0%
Energy 5.95% 0.0%
Communication Services 4.64% 0.0%
Utilities 12.14% 0.0%
Healthcare 7.35% 0.0%
Consumer Defensive 14.01% 0.0%
Real Estate 6.57% 0.0%
Financial Services 16.32% 0.0%
Consumer Cyclical 8.68% 0.0%
Basic Materials 6.45% 0.0%

The SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

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%.

SDY is 16.32% more exposed to the Financial Services sector than TQQQ (16.32% vs 0.0%). SDY’s exposure to Industrials and Consumer Defensive stocks is 15.89% higher and 14.01% higher respectively (15.89% vs. 0.0% and 14.01% vs. 0.0%). In total, Communication Services, Energy, and Basic Materials also make up 17.04% more of the fund’s holdings compared to TQQQ (17.04% vs. 0.00%).

Holdings

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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

SDY TQQQ
Mean Return 1.07 4.65
R-squared 83.62 83.64
Std. Deviation 12.9 50.08
Alpha -0.1 7.29
Beta 0.87 3.37
Sharpe Ratio 0.95 1.1
Treynor Ratio 13.94 15.65

The SPDR S&P Dividend ETF (SDY) has a Treynor Ratio of 13.94 with a Alpha of -0.1 and a R-squared of 83.62. Its Beta is 0.87 while SDY’s Mean Return is 1.07. Furthermore, the fund has a Sharpe Ratio of 0.95 and a Standard Deviation of 12.9.

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

SDY’s Mean Return is 3.58 points lower than that of TQQQ and its R-squared is 0.02 points lower. With a Standard Deviation of 12.9, SDY is slightly less volatile than TQQQ. The Alpha and Beta of SDY are 7.39 points lower and 2.50 points lower than TQQQ’s Alpha and Beta.

Performance

Annual Returns

SDY vs. TQQQ - Annual Returns

Year SDY TQQQ
2020 1.78% 109.85%
2019 23.37% 133.93%
2018 -2.73% -19.65%
2017 15.84% 118.65%
2016 20.17% 11.04%
2015 -0.7% 17.41%
2014 13.8% 56.82%
2013 30.09% 139.98%
2012 11.51% 51.95%
2011 7.28% -7.77%
2010 16.41% 0.0%

SDY had its best year in 2013 with an annual return of 30.09%. SDY’s worst year over the past decade yielded -2.73% and occurred in 2018. In most years the SPDR S&P Dividend ETF provided moderate returns such as in 2012, 2014, and 2017 where annual returns amounted to 11.51%, 13.8%, and 15.84% 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

SDY vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SDY $10,000 $29,900 12.44%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in SDY would have resulted in a final balance of $29,900. This is a profit of $19,900 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.44%.

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%.

SDY’s CAGR is 48.78 percentage points lower than that of TQQQ and as a result, would have yielded $563,112 less on a $10,000 investment. Thus, SDY performed worse than TQQQ by 48.78% annually.


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