VGK vs. TQQQ: What’s The Difference?

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

The expense ratio of VGK is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%). VGK also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VGK has provided lower returns than TQQQ over the past 10 years.

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

Summary

VGK TQQQ
Name Vanguard FTSE Europe Index Fund ETF Shares ProShares UltraPro QQQ
Category Europe Stock Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 25.7B 12.41B
Avg. Return 6.68% 61.22%
Div. Yield 2.52% 0.0%
Expense Ratio 0.08% 0.95%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% 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%.

VGK’s dividend yield is 2.52% higher than that of TQQQ (2.52% vs. 0.0%). Also, VGK yielded on average 54.54% less per year over the past decade (6.68% vs. 61.22%). The expense ratio of VGK is 0.87 percentage points lower than TQQQ’s (0.08% vs. 0.95%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

VGK vs. TQQQ - Industry Exposure

VGK TQQQ
Technology 8.3% 0.0%
Industrials 15.58% 0.0%
Energy 4.3% 0.0%
Communication Services 5.09% 0.0%
Utilities 3.89% 0.0%
Healthcare 13.76% 0.0%
Consumer Defensive 11.39% 0.0%
Real Estate 2.57% 0.0%
Financial Services 15.85% 0.0%
Consumer Cyclical 11.6% 0.0%
Basic Materials 7.67% 0.0%

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

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%.

VGK is 15.85% more exposed to the Financial Services sector than TQQQ (15.85% vs 0.0%). VGK’s exposure to Industrials and Healthcare stocks is 15.58% higher and 13.76% higher respectively (15.58% vs. 0.0% and 13.76% vs. 0.0%). In total, Utilities, Energy, and Communication Services also make up 13.28% more of the fund’s holdings compared to TQQQ (13.28% vs. 0.00%).

Holdings

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

VGK TQQQ
Mean Return 0.61 4.65
R-squared 92.76 83.64
Std. Deviation 16.65 50.08
Alpha 0.45 7.29
Beta 1.06 3.37
Sharpe Ratio 0.4 1.1
Treynor Ratio 5.12 15.65

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Beta of 1.06 with a R-squared of 92.76 and a Mean Return of 0.61. Its Treynor Ratio is 5.12 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Alpha of 0.45.

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

VGK’s Mean Return is 4.04 points lower than that of TQQQ and its R-squared is 9.12 points higher. With a Standard Deviation of 16.65, VGK is slightly less volatile than TQQQ. The Alpha and Beta of VGK are 6.84 points lower and 2.31 points lower than TQQQ’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

VGK vs. TQQQ - Annual Returns

Year VGK TQQQ
2020 6.5% 109.85%
2019 24.26% 133.93%
2018 -14.79% -19.65%
2017 27.06% 118.65%
2016 -0.59% 11.04%
2015 -1.87% 17.41%
2014 -6.56% 56.82%
2013 24.93% 139.98%
2012 21.01% 51.95%
2011 -11.49% -7.77%
2010 5.01% 0.0%

VGK had its best year in 2017 with an annual return of 27.06%. VGK’s worst year over the past decade yielded -14.79% and occurred in 2018. In most years the Vanguard FTSE Europe Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to -0.59%, 5.01%, and 6.5% 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

VGK vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGK $10,000 $17,475 6.68%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in VGK would have resulted in a final balance of $17,475. This is a profit of $7,475 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.68%.

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%.

VGK’s CAGR is 54.54 percentage points lower than that of TQQQ and as a result, would have yielded $575,537 less on a $10,000 investment. Thus, VGK performed worse than TQQQ by 54.54% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply