The Vanguard Real Estate Index Fund ETF Shares (VNQ) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VNQ is a Vanguard Real Estate fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VNQ and TQQQ? And which fund is better?
The expense ratio of VNQ is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%). VNQ also has a higher exposure to the real estate sector and a lower standard deviation. Overall, VNQ has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare VNQ vs. TQQQ. We’ll look at performance and risk metrics, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VNQ’s and TQQQ’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Real Estate Index Fund ETF Shares||ProShares UltraPro QQQ|
|Category||Real Estate||Trading–Leveraged Equity|
The Vanguard Real Estate Index Fund ETF Shares (VNQ) is a Real Estate fund that is issued by Vanguard. It currently has 77.34B total assets under management and has yielded an average annual return of 11.05% over the past 10 years. The fund has a dividend yield of 2.34% with an expense ratio of 0.12%.
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%.
VNQ’s dividend yield is 2.34% higher than that of TQQQ (2.34% vs. 0.0%). Also, VNQ yielded on average 50.17% less per year over the past decade (11.05% vs. 61.22%). The expense ratio of VNQ is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%).
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The Vanguard Real Estate Index Fund ETF Shares (VNQ) has the most exposure to the Real Estate sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VNQ’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Communication Services, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
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%.
VNQ is 100.00% more exposed to the Real Estate sector than TQQQ (100.0% vs 0.0%). VNQ’s exposure to Technology and Industrials stocks is 0.00% lower and 0.00% lower respectively (0.0% vs. 0.0% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Consumer Defensive also make up 0.00% less of the fund’s holdings compared to TQQQ (0.00% vs. 0.00%).
|Vanguard Real Estate II Index||11.62%|
|American Tower Corp||7.24%|
|Crown Castle International Corp||5.01%|
|Simon Property Group Inc||2.52%|
|Digital Realty Trust Inc||2.49%|
|SBA Communications Corp||2.1%|
VNQ’s Top Holdings are Vanguard Real Estate II Index, American Tower Corp, Prologis Inc, Crown Castle International Corp, and Equinix Inc at 11.62%, 7.24%, 5.33%, 5.01%, and 4.3%.
Public Storage (2.85%), Simon Property Group Inc (2.52%), and Digital Realty Trust Inc (2.49%) have a slightly smaller but still significant weight. SBA Communications Corp and Welltower Inc are also represented in the VNQ’s holdings at 2.1% and 2.09%.
|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 Real Estate Index Fund ETF Shares (VNQ) has a Treynor Ratio of 11.9 with a Beta of 0.76 and a Mean Return of 0.89. Its Alpha is 2.47 while VNQ’s Sharpe Ratio is 0.62. Furthermore, the fund has a Standard Deviation of 16.13 and a R-squared of 44.4.
The ProShares UltraPro QQQ (TQQQ) has a Sharpe Ratio of 1.1 with a R-squared of 83.64 and a Beta of 3.37. Its Mean Return is 4.65 while TQQQ’s Standard Deviation is 50.08. Furthermore, the fund has a Alpha of 7.29 and a Treynor Ratio of 15.65.
VNQ’s Mean Return is 3.76 points lower than that of TQQQ and its R-squared is 39.24 points lower. With a Standard Deviation of 16.13, VNQ is slightly less volatile than TQQQ. The Alpha and Beta of VNQ are 4.82 points lower and 2.61 points lower than TQQQ’s Alpha and Beta.
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VNQ had its best year in 2014 with an annual return of 30.29%. VNQ’s worst year over the past decade yielded -5.95% and occurred in 2018. In most years the Vanguard Real Estate Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 4.95%, 8.53%, and 8.62% 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 VNQ would have resulted in a final balance of $22,973. This is a profit of $12,973 over 10 years and amounts to a compound annual growth rate (CAGR) of 11.05%.
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%.
VNQ’s CAGR is 50.17 percentage points lower than that of TQQQ and as a result, would have yielded $570,039 less on a $10,000 investment. Thus, VNQ performed worse than TQQQ by 50.17% annually.
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