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VEU vs. TQQQ: What’s The Difference?

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

The expense ratio of VEU is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than TQQQ over the past ten years.

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

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Summary

VEUTQQQ
NameVanguard FTSE All-World ex-US Index Fund ETF SharesProShares UltraPro QQQ
CategoryForeign Large BlendTrading–Leveraged Equity
IssuerVanguardProShares
AUM53.64B12.41B
Avg. Return6.64%61.22%
Div. Yield2.31%0.0%
Expense Ratio0.08%0.95%

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.

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%.

VEU’s dividend yield is 2.31% higher than that of TQQQ (2.31% vs. 0.0%). Also, VEU yielded on average 54.58% less per year over the past decade (6.64% vs. 61.22%). The expense ratio of VEU is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%).

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Fund Composition

Industry Exposure

VEU vs. TQQQ - Industry Exposure

VEUTQQQ
Technology12.94%0.0%
Industrials12.19%0.0%
Energy4.69%0.0%
Communication Services7.44%0.0%
Utilities2.89%0.0%
Healthcare9.34%0.0%
Consumer Defensive8.28%0.0%
Real Estate3.04%0.0%
Financial Services18.46%0.0%
Consumer Cyclical12.57%0.0%
Basic Materials8.17%0.0%

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.

VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.

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%.

VEU is 18.46% more exposed to the Financial Services sector than TQQQ (18.46% vs 0.0%). VEU’s exposure to Technology and Consumer Cyclical stocks is 12.94% higher and 12.57% higher respectively (12.94% vs. 0.0% and 12.57% vs. 0.0%). In total, Real Estate, Energy, and Communication Services also make up 15.17% more of the fund’s holdings compared to TQQQ (15.17% vs. 0.00%).

Holdings

VEU - Holdings

VEU HoldingsWeight
Tencent Holdings Ltd1.57%
Alibaba Group Holding Ltd Ordinary Shares1.4%
Nestle SA1.22%
Taiwan Semiconductor Manufacturing Co Ltd0.98%
ASML Holding NV0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR0.91%
Roche Holding AG0.91%
Toyota Motor Corp0.75%
LVMH Moet Hennessy Louis Vuitton SE0.68%
Novartis AG0.67%

VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.

Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.

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%.

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Risk Analysis

VEUTQQQ
Mean Return0.564.65
R-squared98.4483.64
Std. Deviation15.0850.08
Alpha0.287.29
Beta0.993.37
Sharpe Ratio0.41.1
Treynor Ratio5.1215.65

The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Treynor Ratio of 5.12 with a Alpha of 0.28 and a Beta of 0.99. Its Sharpe Ratio is 0.4 while VEU’s Mean Return is 0.56. Furthermore, the fund has a R-squared of 98.44 and a Standard Deviation of 15.08.

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

VEU’s Mean Return is 4.09 points lower than that of TQQQ and its R-squared is 14.80 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than TQQQ. The Alpha and Beta of VEU are 7.01 points lower and 2.38 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

VEU vs. TQQQ - Annual Returns

YearVEUTQQQ
202011.39%109.85%
201921.63%133.93%
2018-13.97%-19.65%
201727.27%118.65%
20164.77%11.04%
2015-4.67%17.41%
2014-4.05%56.82%
201314.5%139.98%
201218.55%51.95%
2011-14.25%-7.77%
201011.85%0.0%

VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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

VEU vs. TQQQ - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VEU$10,000$16,5466.64%
TQQQ$10,000$593,01261.22%

A $10,000 investment in VEU would have resulted in a final balance of $16,546. This is a profit of $6,546 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.64%.

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%.

VEU’s CAGR is 54.58 percentage points lower than that of TQQQ and as a result, would have yielded $576,466 less on a $10,000 investment. Thus, VEU performed worse than TQQQ by 54.58% annually.


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