The SPDR S&P 500 ETF Trust (SPY) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between SPY and TQQQ? And which fund is better?
The expense ratio of SPY is 0.86 percentage points lower than TQQQ’s (0.09% vs. 0.95%). SPY also has a higher exposure to the technology sector and a lower standard deviation. Overall, SPY has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare SPY vs. TQQQ. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and performance. Moreover, I’ll also discuss SPY’s and TQQQ’s fund composition, holdings, and risk metrics and examine how these affect their overall returns.
Also see SPY vs. QQQ for another great set of funds to own.
|Name||SPDR S&P 500 ETF Trust||ProShares UltraPro QQQ|
|Category||Large Blend||Trading–Leveraged Equity|
|Issuer||SPDR State Street Global Advisors||ProShares|
The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.
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%.
I wrote some great insight on a similar set of funds VTI vs. QQQ.
SPY’s dividend yield is 1.30% higher than that of TQQQ (1.3% vs. 0.0%). Also, SPY yielded on average 46.81% less per year over the past decade (14.41% vs. 61.22%). The expense ratio of SPY is 0.86 percentage points lower than TQQQ’s (0.09% vs. 0.95%).
The SPDR S&P 500 ETF Trust (SPY) has the most exposure to the Technology sector at 24.22%. This is followed by Financial Services and Healthcare at 14.23% and 13.09% respectively. Utilities (2.45%), Real Estate (2.57%), and Energy (2.86%) only make up 7.88% of the fund’s total assets.
SPY’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.0%, and 13.09%.
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%.
SPY is 24.22% more exposed to the Technology sector than TQQQ (24.22% vs 0.0%). SPY’s exposure to Financial Services and Healthcare stocks is 14.23% higher and 13.09% higher respectively (14.23% vs. 0.0% and 13.09% vs. 0.0%). In total, Utilities, Real Estate, and Energy also make up 7.88% more of the fund’s holdings compared to TQQQ (7.88%; vs. 0.00%;).
|Facebook Inc A||2.29%|
|Alphabet Inc A||2.02%|
|Alphabet Inc Class C||1.96%|
|Berkshire Hathaway Inc Class B||1.45%|
|JPMorgan Chase & Co||1.29%|
SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.
If you need to see some more on SPY I have a breakdown of SPY vs. EMB.
|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%.
The SPDR S&P 500 ETF Trust (SPY) has a Treynor Ratio of 14.12 with a Alpha of -0.09 and a Mean Return of 1.23. Its Standard Deviation is 13.56 while SPY’s Sharpe Ratio is 1.04. Furthermore, the fund has a Beta of 1 and a R-squared of 100.
The ProShares UltraPro QQQ (TQQQ) has a R-squared of 83.64 with a Mean Return of 4.65 and a Treynor Ratio of 15.65. Its Alpha is 7.29 while TQQQ’s Sharpe Ratio is 1.1. Furthermore, the fund has a Standard Deviation of 50.08 and a Beta of 3.37.
These numbers are some of the best in the market, you can see more like SPY vs. SCHX.
SPY’s Mean Return is 3.42 points lower than that of TQQQ and its R-squared is 16.36 points higher. With a Standard Deviation of 13.56, SPY is slightly less volatile than TQQQ. The Alpha and Beta of SPY are 7.38 points lower and 2.37 points lower than TQQQ’s Alpha and Beta.
SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SPY would have resulted in a final balance of $36,293. This is a profit of $26,293 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.41%.
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%.
SPY’s CAGR is 0.00 percentage points lower than that of TQQQ and as a result, would have yielded $556,719 less on a $10,000 investment. Thus, SPY performed worse than TQQQ by 0.00% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.