TQQQ vs. IUSB: What’s The Difference?

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

The expense ratio of TQQQ is 0.89 percentage points higher than IUSB’s (0.95% vs. 0.06%). TQQQ also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, TQQQ has provided higher returns than IUSB over the past 6 years.

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

Summary

TQQQ IUSB
Name ProShares UltraPro QQQ iShares Core Total USD Bond Market ETF
Category Trading–Leveraged Equity N/A
Issuer ProShares iShares
AUM 12.41B 14.49B
Avg. Return 61.22% 4.13%
Div. Yield 0.0% 2.1%
Expense Ratio 0.95% 0.06%

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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

TQQQ’s dividend yield is 2.10% lower than that of IUSB (0.0% vs. 2.1%). Also, TQQQ yielded on average 57.09% more per year over the past decade (61.22% vs. 4.13%). The expense ratio of TQQQ is 0.89 percentage points higher than IUSB’s (0.95% vs. 0.06%).

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Fund Composition

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%.

IUSB - Holdings

IUSB Bond Sectors Weight
AAA 58.32%
BBB 16.98%
A 12.27%
BB 4.33%
AA 3.36%
B 2.8%
Others 1.01%
Below B 0.92%
US Government 0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while IUSB’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.

TQQQ’s Mean Return is 4.65 points higher than that of IUSB and its R-squared is 83.64 points higher. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than IUSB. The Alpha and Beta of TQQQ are 7.29 points higher and 3.37 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. IUSB - Annual Returns

Year TQQQ IUSB
2020 109.85% 7.59%
2019 133.93% 9.26%
2018 -19.65% -0.38%
2017 118.65% 4.06%
2016 11.04% 3.78%
2015 17.41% 0.46%
2014 56.82% 0.0%
2013 139.98% 0.0%
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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

TQQQ vs. IUSB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
TQQQ $10,000 $112,438 61.22%
IUSB $10,000 $12,704 4.13%

A $10,000 investment in TQQQ would have resulted in a final balance of $112,438. This is a profit of $102,438 over 6 years and amounts to a compound annual growth rate (CAGR) of 61.22%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

TQQQ’s CAGR is 57.09 percentage points higher than that of IUSB and as a result, would have yielded $99,734 more on a $10,000 investment. Thus, TQQQ outperformed IUSB by 57.09% annually.


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