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TQQQ vs. IWN: What’s The Difference?

The ProShares UltraPro QQQ (TQQQ) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and IWN is a iShares Small Value fund. So, what’s the difference between TQQQ and IWN? And which fund is better?

The expense ratio of TQQQ is 0.71 percentage points higher than IWN’s (0.95% vs. 0.24%). TQQQ also has a lower exposure to the technology sector and a higher standard deviation. Overall, TQQQ has provided higher returns than IWN over the past 10 years.

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

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Summary

TQQQIWN
NameProShares UltraPro QQQiShares Russell 2000 Value ETF
CategoryTrading–Leveraged EquitySmall Value
IssuerProSharesiShares
AUM12.41B15.48B
Avg. Return61.22%10.96%
Div. Yield0.0%1.26%
Expense Ratio0.95%0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

TQQQ’s dividend yield is 1.26% lower than that of IWN (0.0% vs. 1.26%). Also, TQQQ yielded on average 50.26% more per year over the past decade (61.22% vs. 10.96%). The expense ratio of TQQQ is 0.71 percentage points higher than IWN’s (0.95% vs. 0.24%).

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Fund Composition

Industry Exposure

TQQQ vs. IWN - Industry Exposure

TQQQIWN
Technology0.0%6.02%
Industrials0.0%14.58%
Energy0.0%5.84%
Communication Services0.0%4.17%
Utilities0.0%4.69%
Healthcare0.0%10.94%
Consumer Defensive0.0%3.77%
Real Estate0.0%14.36%
Financial Services0.0%22.97%
Consumer Cyclical0.0%8.39%
Basic Materials0.0%4.29%

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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.

IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.

TQQQ is 6.02% less exposed to the Technology sector than IWN (0.0% vs 6.02%). TQQQ’s exposure to Industrials and Energy stocks is 14.58% lower and 5.84% lower respectively (0.0% vs. 14.58% and 0.0% vs. 5.84%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 45.72% less of the fund’s holdings compared to IWN (0.00% vs. 45.72%).

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%.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

TQQQIWN
Mean Return4.651.01
R-squared83.6472.64
Std. Deviation50.0819.28
Alpha7.29-6.32
Beta3.371.21
Sharpe Ratio1.10.59
Treynor Ratio15.658.3

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

The iShares Russell 2000 Value ETF (IWN) has a Standard Deviation of 19.28 with a R-squared of 72.64 and a Beta of 1.21. Its Treynor Ratio is 8.3 while IWN’s Mean Return is 1.01. Furthermore, the fund has a Alpha of -6.32 and a Sharpe Ratio of 0.59.

TQQQ’s Mean Return is 3.64 points higher than that of IWN and its R-squared is 11.00 points higher. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than IWN. The Alpha and Beta of TQQQ are 13.61 points higher and 2.16 points higher than IWN’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. IWN - Annual Returns

YearTQQQIWN
2020109.85%4.5%
2019133.93%22.17%
2018-19.65%-12.94%
2017118.65%7.73%
201611.04%31.64%
201517.41%-7.53%
201456.82%4.13%
2013139.98%34.3%
201251.95%17.92%
2011-7.77%-5.64%
20100.0%24.29%

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 2013 was the strongest year for IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

TQQQ vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TQQQ$10,000$593,01261.22%
IWN$10,000$22,68010.96%

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 IWN, the end total would have been $22,680. This equates to a $12,680 profit over 10 years and a compound annual growth rate (CAGR) of 10.96%.

TQQQ’s CAGR is 50.26 percentage points higher than that of IWN and as a result, would have yielded $570,332 more on a $10,000 investment. Thus, TQQQ outperformed IWN by 50.26% annually.


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