The ProShares UltraPro QQQ (TQQQ) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between TQQQ and GOVT? And which fund is better?
The expense ratio of TQQQ is 0.90 percentage points higher than GOVT’s (0.95% vs. 0.05%). TQQQ also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, TQQQ has provided higher returns than GOVT over the past 8 years.
In this article, we’ll compare TQQQ vs. GOVT. We’ll look at performance and fund composition, as well as at their risk metrics and portfolio growth. Moreover, I’ll also discuss TQQQ’s and GOVT’s holdings, industry exposure, and annual returns and examine how these affect their overall returns.
Summary
| TQQQ | GOVT | |
| Name | ProShares UltraPro QQQ | iShares U.S. Treasury Bond ETF |
| Category | Trading–Leveraged Equity | Intermediate Government |
| Issuer | ProShares | iShares |
| AUM | 12.41B | 17.07B |
| Avg. Return | 61.22% | 2.67% |
| Div. Yield | 0.0% | 1.0% |
| Expense Ratio | 0.95% | 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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
TQQQ’s dividend yield is 1.00% lower than that of GOVT (0.0% vs. 1.0%). Also, TQQQ yielded on average 58.55% more per year over the past decade (61.22% vs. 2.67%). The expense ratio of TQQQ is 0.90 percentage points higher than GOVT’s (0.95% vs. 0.05%).
Fund Composition
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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| TQQQ | GOVT | |
| Mean Return | 4.65 | 0 |
| R-squared | 83.64 | 0 |
| Std. Deviation | 50.08 | 0 |
| Alpha | 7.29 | 0 |
| Beta | 3.37 | 0 |
| Sharpe Ratio | 1.1 | 0 |
| Treynor Ratio | 15.65 | 0 |
The ProShares UltraPro QQQ (TQQQ) has a Sharpe Ratio of 1.1 with a R-squared of 83.64 and a Mean Return of 4.65. Its Beta is 3.37 while TQQQ’s Standard Deviation is 50.08. Furthermore, the fund has a Alpha of 7.29 and a Treynor Ratio of 15.65.
The iShares U.S. Treasury Bond ETF (GOVT) has a Treynor Ratio of 0 with a Sharpe Ratio of 0 and a Standard Deviation of 0. Its R-squared is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.
TQQQ’s Mean Return is 4.65 points higher than that of GOVT and its R-squared is 83.64 points higher. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than GOVT. The Alpha and Beta of TQQQ are 7.29 points higher and 3.37 points higher than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | TQQQ | GOVT |
| 2020 | 109.85% | 7.92% |
| 2019 | 133.93% | 6.71% |
| 2018 | -19.65% | 0.74% |
| 2017 | 118.65% | 2.19% |
| 2016 | 11.04% | 0.92% |
| 2015 | 17.41% | 0.76% |
| 2014 | 56.82% | 4.99% |
| 2013 | 139.98% | -2.84% |
| 2012 | 51.95% | 0.0% |
| 2011 | -7.77% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| TQQQ | $10,000 | $423,147 | 61.22% |
| GOVT | $10,000 | $12,297 | 2.67% |
A $10,000 investment in TQQQ would have resulted in a final balance of $423,147. This is a profit of $413,147 over 8 years and amounts to a compound annual growth rate (CAGR) of 61.22%.
With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.
TQQQ’s CAGR is 58.55 percentage points higher than that of GOVT and as a result, would have yielded $410,850 more on a $10,000 investment. Thus, TQQQ outperformed GOVT by 58.55% annually.
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