The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VIG and TQQQ? And which fund is better?
The expense ratio of VIG is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare VIG vs. TQQQ. We’ll look at industry exposure and fund composition, as well as at their holdings and performance. Moreover, I’ll also discuss VIG’s and TQQQ’s risk metrics, annual returns, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||ProShares UltraPro QQQ|
|Category||Large Blend||Trading–Leveraged Equity|
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
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%.
VIG’s dividend yield is 1.56% higher than that of TQQQ (1.56% vs. 0.0%). Also, VIG yielded on average 47.88% less per year over the past decade (13.35% vs. 61.22%). The expense ratio of VIG is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%).
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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
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%.
VIG is 17.23% more exposed to the Industrials sector than TQQQ (17.23% vs 0.0%). VIG’s exposure to Financial Services and Healthcare stocks is 17.18% higher and 15.52% higher respectively (17.18% vs. 0.0% and 15.52% vs. 0.0%). In total, Energy, Utilities, and Communication Services also make up 5.67% more of the fund’s holdings compared to TQQQ (5.67% vs. 0.00%).
|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|Visa Inc Class A||3.22%|
|UnitedHealth Group Inc||3.22%|
|The Home Depot Inc||2.91%|
|Procter & Gamble Co||2.82%|
|Comcast Corp Class A||2.21%|
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
|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%|
|Nasdaq 100 Index Swap Credit Suisse International||5.9%|
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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The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Sharpe Ratio of 1.01 with a Alpha of 0.12 and a Standard Deviation of 12.25. Its Mean Return is 1.09 while VIG’s Treynor Ratio is 14.33. Furthermore, the fund has a R-squared of 92.2 and a Beta of 0.86.
The ProShares UltraPro QQQ (TQQQ) has a Standard Deviation of 50.08 with a Alpha of 7.29 and a Beta of 3.37. Its R-squared is 83.64 while TQQQ’s Mean Return is 4.65. Furthermore, the fund has a Sharpe Ratio of 1.1 and a Treynor Ratio of 15.65.
VIG’s Mean Return is 3.56 points lower than that of TQQQ and its R-squared is 8.56 points higher. With a Standard Deviation of 12.25, VIG is slightly less volatile than TQQQ. The Alpha and Beta of VIG are 7.17 points lower and 2.51 points lower than TQQQ’s Alpha and Beta.
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VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VIG would have resulted in a final balance of $33,096. This is a profit of $23,096 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 47.88 percentage points lower than that of TQQQ and as a result, would have yielded $559,916 less on a $10,000 investment. Thus, VIG performed worse than TQQQ by 47.88% annually.
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