The Vanguard Small-Cap Index Fund ETF Shares (VB) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VB and TQQQ? And which fund is better?
The expense ratio of VB is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%). VB also has a higher exposure to the technology sector and a lower standard deviation. Overall, VB has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare VB vs. TQQQ. We’ll look at risk metrics and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss VB’s and TQQQ’s annual returns, industry exposure, and portfolio growth and examine how these affect their overall returns.
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|Name||Vanguard Small-Cap Index Fund ETF Shares||ProShares UltraPro QQQ|
|Category||Small Blend||Trading–Leveraged Equity|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
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%.
VB’s dividend yield is 1.14% higher than that of TQQQ (1.14% vs. 0.0%). Also, VB yielded on average 46.97% less per year over the past decade (14.25% vs. 61.22%). The expense ratio of VB is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%).
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 16.85% more exposed to the Technology sector than TQQQ (16.85% vs 0.0%). VB’s exposure to Industrials and Healthcare stocks is 16.11% higher and 14.34% higher respectively (16.11% vs. 0.0% and 14.34% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.21% more of the fund’s holdings compared to TQQQ (10.21% vs. 0.00%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|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%|
|Nasdaq 100 Index Swap Credit Suisse International||5.9%|
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%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Beta of 1.21 with a R-squared of 85.03 and a Treynor Ratio of 10.15. Its Standard Deviation is 17.82 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Mean Return of 1.15 and a Alpha of -4.02.
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 Beta is 3.37. Furthermore, the fund has a Alpha of 7.29 and a Treynor Ratio of 15.65.
VB’s Mean Return is 3.50 points lower than that of TQQQ and its R-squared is 1.39 points higher. With a Standard Deviation of 17.82, VB is slightly less volatile than TQQQ. The Alpha and Beta of VB are 11.31 points lower and 2.16 points lower than TQQQ’s Alpha and Beta.
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VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $31,069. This is a profit of $21,069 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in TQQQ, the end total would have been $593,012. This equates to a $583,012 profit over 10 years and a compound annual growth rate (CAGR) of 61.22%.
VB’s CAGR is 46.97 percentage points lower than that of TQQQ and as a result, would have yielded $561,943 less on a $10,000 investment. Thus, VB performed worse than TQQQ by 46.97% annually.
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