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TQQQ vs. BIV: What’s The Difference?

The ProShares UltraPro QQQ (TQQQ) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between TQQQ and BIV? And which fund is better?

The expense ratio of TQQQ is 0.90 percentage points higher than BIV’s (0.95% vs. 0.05%). TQQQ also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, TQQQ has provided higher returns than BIV over the past 10 years.

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

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Summary

TQQQBIV
NameProShares UltraPro QQQVanguard Intermediate-Term Bond Index Fund ETF Shares
CategoryTrading–Leveraged EquityIntermediate-Term Bond
IssuerProSharesVanguard
AUM12.41B39.05B
Avg. Return61.22%5.31%
Div. Yield0.0%2.06%
Expense Ratio0.95%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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

TQQQ’s dividend yield is 2.06% lower than that of BIV (0.0% vs. 2.06%). Also, TQQQ yielded on average 55.91% more per year over the past decade (61.22% vs. 5.31%). The expense ratio of TQQQ is 0.90 percentage points higher than BIV’s (0.95% vs. 0.05%).

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Fund Composition

Holdings

TQQQ - Holdings

TQQQ HoldingsWeight
Nasdaq 100 Index Swap Goldman Sachs International45.11%
Nasdaq 100 Index Swap Societe Generale44.73%
Nasdaq 100 Index Swap Bnp Paribas38.05%
Nasdaq 100 Index Swap Bank Of America Na31.53%
Nasdaq 100 Index Swap Citibank Na31.49%
Nasdaq 100 Index Swap Jp Morgan Securities26.2%
Apple Inc7.49%
Microsoft Corp6.69%
Nasdaq 100 Index Swap Credit Suisse International5.9%
Amazon.com Inc5.68%

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%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

TQQQBIV
Mean Return4.650.35
R-squared83.6495.12
Std. Deviation50.084.09
Alpha7.29-0.07
Beta3.371.33
Sharpe Ratio1.10.89
Treynor Ratio15.652.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Treynor Ratio of 2.72 and a Beta of 1.33. Its R-squared is 95.12 while BIV’s Alpha is -0.07. Furthermore, the fund has a Sharpe Ratio of 0.89 and a Mean Return of 0.35.

TQQQ’s Mean Return is 4.30 points higher than that of BIV and its R-squared is 11.48 points lower. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than BIV. The Alpha and Beta of TQQQ are 7.36 points higher and 2.04 points higher than BIV’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. BIV - Annual Returns

YearTQQQBIV
2020109.85%9.71%
2019133.93%10.19%
2018-19.65%-0.09%
2017118.65%3.8%
201611.04%2.86%
201517.41%1.23%
201456.82%7.0%
2013139.98%-3.44%
201251.95%7.02%
2011-7.77%10.62%
20100.0%9.55%

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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

TQQQ vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TQQQ$10,000$593,01261.22%
BIV$10,000$15,9675.31%

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 BIV, the end total would have been $15,967. This equates to a $5,967 profit over 10 years and a compound annual growth rate (CAGR) of 5.31%.

TQQQ’s CAGR is 55.91 percentage points higher than that of BIV and as a result, would have yielded $577,045 more on a $10,000 investment. Thus, TQQQ outperformed BIV by 55.91% annually.


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