VEA vs. TQQQ: What’s The Difference?

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VEA and TQQQ? And which fund is better?

The expense ratio of VEA is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%). VEA also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEA has provided lower returns than TQQQ over the past ten years.

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

Summary

VEA TQQQ
Name Vanguard FTSE Developed Markets Index Fund ETF Shares ProShares UltraPro QQQ
Category Foreign Large Blend Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 157.48B 12.41B
Avg. Return 7.05% 61.22%
Div. Yield 2.49% 0.0%
Expense Ratio 0.05% 0.95%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% 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%.

VEA’s dividend yield is 2.49% higher than that of TQQQ (2.49% vs. 0.0%). Also, VEA yielded on average 54.17% less per year over the past decade (7.05% vs. 61.22%). The expense ratio of VEA is 0.90 percentage points lower than TQQQ’s (0.05% vs. 0.95%).

Fund Composition

Industry Exposure

VEA vs. TQQQ - Industry Exposure

VEA TQQQ
Technology 11.67% 0.0%
Industrials 15.47% 0.0%
Energy 4.17% 0.0%
Communication Services 5.41% 0.0%
Utilities 3.1% 0.0%
Healthcare 10.6% 0.0%
Consumer Defensive 8.61% 0.0%
Real Estate 4.04% 0.0%
Financial Services 17.39% 0.0%
Consumer Cyclical 11.31% 0.0%
Basic Materials 8.24% 0.0%

The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.

VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.

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%.

VEA is 17.39% more exposed to the Financial Services sector than TQQQ (17.39% vs 0.0%). VEA’s exposure to Industrials and Technology stocks is 15.47% higher and 11.67% higher respectively (15.47% vs. 0.0% and 11.67% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 13.62% more of the fund’s holdings compared to TQQQ (13.62% vs. 0.00%).

Holdings

VEA - Holdings

VEA Holdings Weight
Nestle SA 1.5%
Samsung Electronics Co Ltd 1.4%
ASML Holding NV 1.16%
Roche Holding AG 1.1%
Toyota Motor Corp 0.92%
LVMH Moet Hennessy Louis Vuitton SE 0.84%
Novartis AG 0.82%
Shopify Inc A 0.7%
AstraZeneca PLC 0.67%
SAP SE 0.66%

VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.

LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.

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%.

Performance

Annual Returns

VEA vs. TQQQ - Annual Returns

Year VEA TQQQ
2020 10.29% 109.85%
2019 22.08% 133.93%
2018 -14.47% -19.65%
2017 26.44% 118.65%
2016 2.51% 11.04%
2015 -0.21% 17.41%
2014 -5.71% 56.82%
2013 22.12% 139.98%
2012 18.6% 51.95%
2011 -12.57% -7.77%
2010 8.47% 0.0%

VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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

VEA vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VEA $10,000 $17,784 7.05%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in VEA would have resulted in a final balance of $17,784. This is a profit of $7,784 over 10 years and amounts to a compound annual growth rate (CAGR) of 7.05%.

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%.

VEA’s CAGR is 54.17 percentage points lower than that of TQQQ and as a result, would have yielded $575,228 less on a $10,000 investment. Thus, VEA performed worse than TQQQ by 54.17% annually.


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