VGT vs. TQQQ: What’s The Difference?

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

The expense ratio of VGT is 0.85 percentage points lower than TQQQ’s (0.1% vs. 0.95%). VGT also has a higher exposure to the technology sector and a lower standard deviation. Overall, VGT has provided lower returns than TQQQ over the past ten years.

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

Summary

VGT TQQQ
Name Vanguard Information Technology Index Fund ETF Shares ProShares UltraPro QQQ
Category Technology Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 54.13B 12.41B
Avg. Return 20.84% 61.22%
Div. Yield 0.66% 0.0%
Expense Ratio 0.1% 0.95%

The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.

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%.

VGT’s dividend yield is 0.66% higher than that of TQQQ (0.66% vs. 0.0%). Also, VGT yielded on average 40.39% less per year over the past decade (20.84% vs. 61.22%). The expense ratio of VGT is 0.85 percentage points lower than TQQQ’s (0.1% vs. 0.95%).

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Fund Composition

Industry Exposure

VGT vs. TQQQ - Industry Exposure

VGT TQQQ
Technology 88.89% 0.0%
Industrials 1.67% 0.0%
Energy 0.0% 0.0%
Communication Services 0.61% 0.0%
Utilities 0.0% 0.0%
Healthcare 0.0% 0.0%
Consumer Defensive 0.0% 0.0%
Real Estate 0.0% 0.0%
Financial Services 8.83% 0.0%
Consumer Cyclical 0.0% 0.0%
Basic Materials 0.0% 0.0%

The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.

VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.

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%.

VGT is 88.89% more exposed to the Technology sector than TQQQ (88.89% vs 0.0%). VGT’s exposure to Financial Services and Industrials stocks is 8.83% higher and 1.67% higher respectively (8.83% vs. 0.0% and 1.67% vs. 0.0%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to TQQQ (0.00% vs. 0.00%).

Holdings

VGT - Holdings

VGT Holdings Weight
Apple Inc 19.58%
Microsoft Corp 16.53%
NVIDIA Corp 4.22%
Visa Inc Class A 3.16%
PayPal Holdings Inc 2.76%
Mastercard Inc Class A 2.76%
Adobe Inc 2.39%
Intel Corp 1.94%
Salesforce.com Inc 1.91%
Cisco Systems Inc 1.9%

VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.

Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.

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%.

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Risk Analysis

VGT TQQQ
Mean Return 1.76 4.65
R-squared 74.84 83.64
Std. Deviation 16.61 50.08
Alpha 10.41 7.29
Beta 1.02 3.37
Sharpe Ratio 1.23 1.1
Treynor Ratio 20.55 15.65

The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Standard Deviation of 16.61 with a Treynor Ratio of 20.55 and a Mean Return of 1.76. Its Sharpe Ratio is 1.23 while VGT’s Alpha is 10.41. Furthermore, the fund has a R-squared of 74.84 and a Beta of 1.02.

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

VGT’s Mean Return is 2.89 points lower than that of TQQQ and its R-squared is 8.80 points lower. With a Standard Deviation of 16.61, VGT is slightly less volatile than TQQQ. The Alpha and Beta of VGT are 3.12 points higher and 2.35 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

VGT vs. TQQQ - Annual Returns

Year VGT TQQQ
2020 45.94% 109.85%
2019 48.68% 133.93%
2018 2.52% -19.65%
2017 37.07% 118.65%
2016 13.73% 11.04%
2015 5.02% 17.41%
2014 18.01% 56.82%
2013 30.91% 139.98%
2012 14.05% 51.95%
2011 0.52% -7.77%
2010 12.74% 0.0%

VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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

VGT vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VGT $10,000 $64,500 20.84%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in VGT would have resulted in a final balance of $64,500. This is a profit of $54,500 over 10 years and amounts to a compound annual growth rate (CAGR) of 20.84%.

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%.

VGT’s CAGR is 40.39 percentage points lower than that of TQQQ and as a result, would have yielded $528,512 less on a $10,000 investment. Thus, VGT performed worse than TQQQ by 40.39% annually.


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