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TQQQ vs. IWS: What’s The Difference?

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

The expense ratio of TQQQ is 0.72 percentage points higher than IWS’s (0.95% vs. 0.23%). TQQQ also has a lower exposure to the technology sector and a higher standard deviation. Overall, TQQQ has provided higher returns than IWS over the past 10 years.

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

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Summary

TQQQIWS
NameProShares UltraPro QQQiShares Russell Mid-Cap Value ETF
CategoryTrading–Leveraged EquityMid-Cap Value
IssuerProSharesiShares
AUM12.41B14.24B
Avg. Return61.22%12.35%
Div. Yield0.0%1.34%
Expense Ratio0.95%0.23%

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 Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

TQQQ’s dividend yield is 1.34% lower than that of IWS (0.0% vs. 1.34%). Also, TQQQ yielded on average 48.87% more per year over the past decade (61.22% vs. 12.35%). The expense ratio of TQQQ is 0.72 percentage points higher than IWS’s (0.95% vs. 0.23%).

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Fund Composition

Industry Exposure

TQQQ vs. IWS - Industry Exposure

TQQQIWS
Technology0.0%11.39%
Industrials0.0%14.6%
Energy0.0%4.71%
Communication Services0.0%4.08%
Utilities0.0%6.97%
Healthcare0.0%8.56%
Consumer Defensive0.0%4.76%
Real Estate0.0%11.71%
Financial Services0.0%15.75%
Consumer Cyclical0.0%12.07%
Basic Materials0.0%5.4%

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 Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

TQQQ is 11.39% less exposed to the Technology sector than IWS (0.0% vs 11.39%). TQQQ’s exposure to Industrials and Energy stocks is 14.60% lower and 4.71% lower respectively (0.0% vs. 14.6% and 0.0% vs. 4.71%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 39.53% less of the fund’s holdings compared to IWS (0.00% vs. 39.53%).

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%.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

TQQQIWS
Mean Return4.651.06
R-squared83.6487.04
Std. Deviation50.0816.03
Alpha7.29-4.11
Beta3.371.1
Sharpe Ratio1.10.75
Treynor Ratio15.6510.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Standard Deviation of 16.03 with a Alpha of -4.11 and a Treynor Ratio of 10.3. Its Beta is 1.1 while IWS’s R-squared is 87.04. Furthermore, the fund has a Mean Return of 1.06 and a Sharpe Ratio of 0.75.

TQQQ’s Mean Return is 3.59 points higher than that of IWS and its R-squared is 3.40 points lower. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than IWS. The Alpha and Beta of TQQQ are 11.40 points higher and 2.27 points higher than IWS’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. IWS - Annual Returns

YearTQQQIWS
2020109.85%4.76%
2019133.93%26.78%
2018-19.65%-12.36%
2017118.65%13.1%
201611.04%19.69%
201517.41%-4.93%
201456.82%14.49%
2013139.98%33.11%
201251.95%18.27%
2011-7.77%-1.55%
20100.0%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

TQQQ vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TQQQ$10,000$593,01261.22%
IWS$10,000$26,58112.35%

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 IWS, the end total would have been $26,581. This equates to a $16,581 profit over 10 years and a compound annual growth rate (CAGR) of 12.35%.

TQQQ’s CAGR is 48.87 percentage points higher than that of IWS and as a result, would have yielded $566,431 more on a $10,000 investment. Thus, TQQQ outperformed IWS by 48.87% annually.


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