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.

Summary

VEU TQQQ
Name Vanguard FTSE All-World ex-US Index Fund ETF Shares ProShares UltraPro QQQ
Category Foreign Large Blend Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 53.64B 12.41B
Avg. Return 6.64% 61.22%
Div. Yield 2.31% 0.0%
Expense Ratio 0.08% 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%).

Fund Composition

Industry Exposure

VEU vs. TQQQ - Industry Exposure

VEU TQQQ
Technology 12.94% 0.0%
Industrials 12.19% 0.0%
Energy 4.69% 0.0%
Communication Services 7.44% 0.0%
Utilities 2.89% 0.0%
Healthcare 9.34% 0.0%
Consumer Defensive 8.28% 0.0%
Real Estate 3.04% 0.0%
Financial Services 18.46% 0.0%
Consumer Cyclical 12.57% 0.0%
Basic Materials 8.17% 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 Holdings Weight
Tencent Holdings Ltd 1.57%
Alibaba Group Holding Ltd Ordinary Shares 1.4%
Nestle SA 1.22%
Taiwan Semiconductor Manufacturing Co Ltd 0.98%
ASML Holding NV 0.95%
Taiwan Semiconductor Manufacturing Co Ltd ADR 0.91%
Roche Holding AG 0.91%
Toyota Motor Corp 0.75%
LVMH Moet Hennessy Louis Vuitton SE 0.68%
Novartis AG 0.67%

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 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%.

Risk Analysis

VEU TQQQ
Mean Return 0.56 4.65
R-squared 98.44 83.64
Std. Deviation 15.08 50.08
Alpha 0.28 7.29
Beta 0.99 3.37
Sharpe Ratio 0.4 1.1
Treynor Ratio 5.12 15.65

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.

Performance

Annual Returns

VEU vs. TQQQ - Annual Returns

Year VEU TQQQ
2020 11.39% 109.85%
2019 21.63% 133.93%
2018 -13.97% -19.65%
2017 27.27% 118.65%
2016 4.77% 11.04%
2015 -4.67% 17.41%
2014 -4.05% 56.82%
2013 14.5% 139.98%
2012 18.55% 51.95%
2011 -14.25% -7.77%
2010 11.85% 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

Fund Initial Balance Final Balance CAGR
VEU $10,000 $16,546 6.64%
TQQQ $10,000 $593,012 61.22%

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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