USMV vs. TQQQ: What’s The Difference?

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

The expense ratio of USMV is 0.80 percentage points lower than TQQQ’s (0.15% vs. 0.95%). USMV also has a higher exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than TQQQ over the past 8 years.

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

Summary

USMV TQQQ
Name iShares MSCI USA Min Vol Factor ETF ProShares UltraPro QQQ
Category Large Blend Trading–Leveraged Equity
Issuer iShares ProShares
AUM 27.6B 12.41B
Avg. Return 13.89% 61.22%
Div. Yield 1.5% 0.0%
Expense Ratio 0.15% 0.95%

The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 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%.

USMV’s dividend yield is 1.50% higher than that of TQQQ (1.5% vs. 0.0%). Also, USMV yielded on average 47.33% less per year over the past decade (13.89% vs. 61.22%). The expense ratio of USMV is 0.80 percentage points lower than TQQQ’s (0.15% vs. 0.95%).

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Fund Composition

Industry Exposure

USMV vs. TQQQ - Industry Exposure

USMV TQQQ
Technology 20.53% 0.0%
Industrials 10.51% 0.0%
Energy 0.21% 0.0%
Communication Services 11.03% 0.0%
Utilities 6.93% 0.0%
Healthcare 18.42% 0.0%
Consumer Defensive 12.82% 0.0%
Real Estate 2.73% 0.0%
Financial Services 9.65% 0.0%
Consumer Cyclical 5.53% 0.0%
Basic Materials 1.65% 0.0%

The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

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%.

USMV is 20.53% more exposed to the Technology sector than TQQQ (20.53% vs 0.0%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 18.42% higher and 12.82% higher respectively (18.42% vs. 0.0% and 12.82% vs. 0.0%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 9.91% more of the fund’s holdings compared to TQQQ (9.91% vs. 0.00%).

Holdings

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

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%.

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Risk Analysis

USMV TQQQ
Mean Return 0 4.65
R-squared 0 83.64
Std. Deviation 0 50.08
Alpha 0 7.29
Beta 0 3.37
Sharpe Ratio 0 1.1
Treynor Ratio 0 15.65

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Beta of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while USMV’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

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

USMV’s Mean Return is 4.65 points lower than that of TQQQ and its R-squared is 83.64 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than TQQQ. The Alpha and Beta of USMV are 7.29 points lower and 3.37 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. TQQQ - Annual Returns

Year USMV TQQQ
2020 5.6% 109.85%
2019 27.77% 133.93%
2018 1.36% -19.65%
2017 18.97% 118.65%
2016 10.5% 11.04%
2015 5.5% 17.41%
2014 16.34% 56.82%
2013 25.11% 139.98%
2012 11.04% 51.95%
2011 0.0% -7.77%
2010 0.0% 0.0%

USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% respectively.

The year 2013 was the strongest year for TQQQ, returning 139.98% on an annual basis. The poorest year for TQQQ in the last ten years was 2018, with a yield of -19.65%. Most years the ProShares UltraPro QQQ has given investors modest returns, such as in 2015, 2012, and 2014, when gains were 17.41%, 51.95%, and 56.82% respectively.

Portfolio Growth

USMV vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
TQQQ $10,000 $423,147 61.22%

A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.

With a $10,000 investment in TQQQ, the end total would have been $423,147. This equates to a $413,147 profit over 8 years and a compound annual growth rate (CAGR) of 61.22%.

USMV’s CAGR is 47.33 percentage points lower than that of TQQQ and as a result, would have yielded $395,540 less on a $10,000 investment. Thus, USMV performed worse than TQQQ by 47.33% annually.


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