TQQQ vs. VBK: What’s The Difference?

The ProShares UltraPro QQQ (TQQQ) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. TQQQ is a ProShares Trading–Leveraged Equity fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between TQQQ and VBK? And which fund is better?

The expense ratio of TQQQ is 0.88 percentage points higher than VBK’s (0.95% vs. 0.07%). TQQQ also has a lower exposure to the technology sector and a higher standard deviation. Overall, TQQQ has provided higher returns than VBK over the past 10 years.

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

Summary

TQQQ VBK
Name ProShares UltraPro QQQ Vanguard Small-Cap Growth Index Fund ETF Shares
Category Trading–Leveraged Equity Small Growth
Issuer ProShares Vanguard
AUM 12.41B 37.89B
Avg. Return 61.22% 16.53%
Div. Yield 0.0% 0.45%
Expense Ratio 0.95% 0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

TQQQ’s dividend yield is 0.45% lower than that of VBK (0.0% vs. 0.45%). Also, TQQQ yielded on average 44.69% more per year over the past decade (61.22% vs. 16.53%). The expense ratio of TQQQ is 0.88 percentage points higher than VBK’s (0.95% vs. 0.07%).

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Fund Composition

Industry Exposure

TQQQ vs. VBK - Industry Exposure

TQQQ VBK
Technology 0.0% 27.87%
Industrials 0.0% 13.19%
Energy 0.0% 1.77%
Communication Services 0.0% 3.24%
Utilities 0.0% 0.32%
Healthcare 0.0% 23.24%
Consumer Defensive 0.0% 3.83%
Real Estate 0.0% 7.87%
Financial Services 0.0% 4.05%
Consumer Cyclical 0.0% 12.13%
Basic Materials 0.0% 2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

TQQQ is 27.87% less exposed to the Technology sector than VBK (0.0% vs 27.87%). TQQQ’s exposure to Industrials and Energy stocks is 13.19% lower and 1.77% lower respectively (0.0% vs. 13.19% and 0.0% vs. 1.77%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 24.05% less of the fund’s holdings compared to VBK (0.00% vs. 24.05%).

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%.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

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Risk Analysis

TQQQ VBK
Mean Return 4.65 1.22
R-squared 83.64 80.56
Std. Deviation 50.08 17.95
Alpha 7.29 -2.81
Beta 3.37 1.18
Sharpe Ratio 1.1 0.78
Treynor Ratio 15.65 11.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a R-squared of 80.56 with a Beta of 1.18 and a Mean Return of 1.22. Its Sharpe Ratio is 0.78 while VBK’s Standard Deviation is 17.95. Furthermore, the fund has a Treynor Ratio of 11.18 and a Alpha of -2.81.

TQQQ’s Mean Return is 3.43 points higher than that of VBK and its R-squared is 3.08 points higher. With a Standard Deviation of 50.08, TQQQ is slightly more volatile than VBK. The Alpha and Beta of TQQQ are 10.10 points higher and 2.19 points higher than VBK’s Alpha and Beta.

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Performance

Annual Returns

TQQQ vs. VBK - Annual Returns

Year TQQQ VBK
2020 109.85% 35.29%
2019 133.93% 32.75%
2018 -19.65% -5.68%
2017 118.65% 21.9%
2016 11.04% 10.74%
2015 17.41% -2.51%
2014 56.82% 4.02%
2013 139.98% 38.18%
2012 51.95% 17.67%
2011 -7.77% -1.43%
2010 0.0% 30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

TQQQ vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
TQQQ $10,000 $593,012 61.22%
VBK $10,000 $37,165 16.53%

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 VBK, the end total would have been $37,165. This equates to a $27,165 profit over 10 years and a compound annual growth rate (CAGR) of 16.53%.

TQQQ’s CAGR is 44.69 percentage points higher than that of VBK and as a result, would have yielded $555,847 more on a $10,000 investment. Thus, TQQQ outperformed VBK by 44.69% annually.


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