TQQQ vs. ACWI: What’s The Difference?

The ProShares UltraPro QQQ (TQQQ) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and ACWI is a iShares N/A fund. So, what’s the difference between TQQQ and ACWI? And which fund is better?

The expense ratio of TQQQ is 0.63 percentage points higher than ACWI’s (0.95% vs. 0.32%). TQQQ also has a lower exposure to the technology sector and a higher standard deviation. Overall, TQQQ has provided higher returns than ACWI over the past 10 years.

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

Summary

TQQQ ACWI
Name ProShares UltraPro QQQ iShares MSCI ACWI ETF
Category Trading–Leveraged Equity N/A
Issuer ProShares iShares
AUM 12.41B 16.85B
Avg. Return 61.22% 10.21%
Div. Yield 0.0% 1.39%
Expense Ratio 0.95% 0.32%

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%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

TQQQ’s dividend yield is 1.39% lower than that of ACWI (0.0% vs. 1.39%). Also, TQQQ yielded on average 51.01% more per year over the past decade (61.22% vs. 10.21%). The expense ratio of TQQQ is 0.63 percentage points higher than ACWI’s (0.95% vs. 0.32%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

TQQQ vs. ACWI - Industry Exposure

TQQQ ACWI
Technology 0.0% 20.41%
Industrials 0.0% 9.65%
Energy 0.0% 3.48%
Communication Services 0.0% 9.87%
Utilities 0.0% 2.61%
Healthcare 0.0% 11.74%
Consumer Defensive 0.0% 7.15%
Real Estate 0.0% 2.75%
Financial Services 0.0% 15.58%
Consumer Cyclical 0.0% 12.01%
Basic Materials 0.0% 4.73%

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%.

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

TQQQ is 20.41% less exposed to the Technology sector than ACWI (0.0% vs 20.41%). TQQQ’s exposure to Industrials and Energy stocks is 9.65% lower and 3.48% lower respectively (0.0% vs. 9.65% and 0.0% vs. 3.48%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 30.34% less of the fund’s holdings compared to ACWI (0.00% vs. 30.34%).

Holdings

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%.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

TQQQ ACWI
Mean Return 4.65 0.89
R-squared 83.64 99.96
Std. Deviation 50.08 14.05
Alpha 7.29 0.15
Beta 3.37 1
Sharpe Ratio 1.1 0.71
Treynor Ratio 15.65 9.45

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

The iShares MSCI ACWI ETF (ACWI) has a R-squared of 99.96 with a Beta of 1 and a Standard Deviation of 14.05. Its Alpha is 0.15 while ACWI’s Treynor Ratio is 9.45. Furthermore, the fund has a Mean Return of 0.89 and a Sharpe Ratio of 0.71.

TQQQ’s Mean Return is 3.76 points higher than that of ACWI and its R-squared is 16.32 points lower. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than ACWI. The Alpha and Beta of TQQQ are 7.14 points higher and 2.37 points higher than ACWI’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Gemini - the simplest and cheapest broker I've found! Click here to read more (link to Gemini).

Performance

Annual Returns

TQQQ vs. ACWI - Annual Returns

Year TQQQ ACWI
2020 109.85% 16.38%
2019 133.93% 26.7%
2018 -19.65% -9.15%
2017 118.65% 24.35%
2016 11.04% 8.22%
2015 17.41% -2.39%
2014 56.82% 4.64%
2013 139.98% 22.91%
2012 51.95% 15.99%
2011 -7.77% -7.6%
2010 0.0% 12.31%

TQQQ had its best year in 2013 with an annual return of 139.98%. TQQQ’s worst year over the past decade yielded -19.65% and occurred in 2018. In most years the ProShares UltraPro QQQ provided moderate returns such as in 2015, 2012, and 2014 where annual returns amounted to 17.41%, 51.95%, and 56.82% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

TQQQ vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
TQQQ $10,000 $593,012 61.22%
ACWI $10,000 $24,255 10.21%

A $10,000 investment in TQQQ would have resulted in a final balance of $593,012. This is a profit of $583,012 over 10 years and amounts to a compound annual growth rate (CAGR) of 61.22%.

With a $10,000 investment in ACWI, the end total would have been $24,255. This equates to a $14,255 profit over 10 years and a compound annual growth rate (CAGR) of 10.21%.

TQQQ’s CAGR is 51.01 percentage points higher than that of ACWI and as a result, would have yielded $568,757 more on a $10,000 investment. Thus, TQQQ outperformed ACWI by 51.01% annually.


Current recommendations:

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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply