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TQQQ vs. MTUM: What’s The Difference?

The ProShares UltraPro QQQ (TQQQ) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and MTUM is a iShares Large Growth fund. So, what’s the difference between TQQQ and MTUM? And which fund is better?

The expense ratio of TQQQ is 0.80 percentage points higher than MTUM’s (0.95% vs. 0.15%). TQQQ also has a lower exposure to the technology sector and a higher standard deviation. Overall, TQQQ has provided higher returns than MTUM over the past 7 years.

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

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Summary

TQQQMTUM
NameProShares UltraPro QQQiShares MSCI USA Momentum Factor ETF
CategoryTrading–Leveraged EquityLarge Growth
IssuerProSharesiShares
AUM12.41B14.53B
Avg. Return61.22%17.37%
Div. Yield0.0%0.44%
Expense Ratio0.95%0.15%

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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

TQQQ’s dividend yield is 0.44% lower than that of MTUM (0.0% vs. 0.44%). Also, TQQQ yielded on average 43.85% more per year over the past decade (61.22% vs. 17.37%). The expense ratio of TQQQ is 0.80 percentage points higher than MTUM’s (0.95% vs. 0.15%).

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Fund Composition

Industry Exposure

TQQQ vs. MTUM - Industry Exposure

TQQQMTUM
Technology0.0%15.24%
Industrials0.0%12.47%
Energy0.0%1.77%
Communication Services0.0%13.18%
Utilities0.0%0.19%
Healthcare0.0%6.41%
Consumer Defensive0.0%2.88%
Real Estate0.0%0.43%
Financial Services0.0%34.32%
Consumer Cyclical0.0%9.96%
Basic Materials0.0%3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

TQQQ is 15.24% less exposed to the Technology sector than MTUM (0.0% vs 15.24%). TQQQ’s exposure to Industrials and Energy stocks is 12.47% lower and 1.77% lower respectively (0.0% vs. 12.47% and 0.0% vs. 1.77%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 44.71% less of the fund’s holdings compared to MTUM (0.00% vs. 44.71%).

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%.

MTUM - Holdings

MTUM HoldingsWeight
Tesla Inc5.63%
The Walt Disney Co4.39%
JPMorgan Chase & Co4.35%
Berkshire Hathaway Inc Class B4.34%
Bank of America Corp3.81%
PayPal Holdings Inc3.76%
Wells Fargo & Co3.05%
Applied Materials Inc3.05%
Moderna Inc2.89%
Alphabet Inc Class C2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

TQQQMTUM
Mean Return4.650
R-squared83.640
Std. Deviation50.080
Alpha7.290
Beta3.370
Sharpe Ratio1.10
Treynor Ratio15.650

The ProShares UltraPro QQQ (TQQQ) has a Treynor Ratio of 15.65 with a Standard Deviation of 50.08 and a Mean Return of 4.65. 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 Alpha of 7.29.

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a Sharpe Ratio of 0 and a R-squared of 0. Its Beta is 0 while MTUM’s Standard Deviation 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 MTUM and its R-squared is 83.64 points higher. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than MTUM. The Alpha and Beta of TQQQ are 7.29 points higher and 3.37 points higher than MTUM’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. MTUM - Annual Returns

YearTQQQMTUM
2020109.85%29.69%
2019133.93%27.57%
2018-19.65%-1.77%
2017118.65%37.6%
201611.04%4.89%
201517.41%9.12%
201456.82%14.48%
2013139.98%0.0%
201251.95%0.0%
2011-7.77%0.0%
20100.0%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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

TQQQ vs. MTUM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TQQQ$10,000$176,32561.22%
MTUM$10,000$29,30117.37%

A $10,000 investment in TQQQ would have resulted in a final balance of $176,325. This is a profit of $166,325 over 7 years and amounts to a compound annual growth rate (CAGR) of 61.22%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

TQQQ’s CAGR is 43.85 percentage points higher than that of MTUM and as a result, would have yielded $147,024 more on a $10,000 investment. Thus, TQQQ outperformed MTUM by 43.85% annually.


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