VO vs. TQQQ: What’s The Difference?

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

The expense ratio of VO is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%). VO also has a higher exposure to the technology sector and a lower standard deviation. Overall, VO has provided lower returns than TQQQ over the past ten years.

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

Summary

VO TQQQ
Name Vanguard Mid-Cap Index Fund ETF Shares ProShares UltraPro QQQ
Category Mid-Cap Blend Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 154.08B 12.41B
Avg. Return 14.34% 61.22%
Div. Yield 1.23% 0.0%
Expense Ratio 0.04% 0.95%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

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%.

VO’s dividend yield is 1.23% higher than that of TQQQ (1.23% vs. 0.0%). Also, VO yielded on average 46.89% less per year over the past decade (14.34% vs. 61.22%). The expense ratio of VO is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%).

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Fund Composition

Industry Exposure

VO vs. TQQQ - Industry Exposure

VO TQQQ
Technology 22.01% 0.0%
Industrials 11.92% 0.0%
Energy 3.82% 0.0%
Communication Services 5.61% 0.0%
Utilities 5.12% 0.0%
Healthcare 13.03% 0.0%
Consumer Defensive 3.25% 0.0%
Real Estate 8.67% 0.0%
Financial Services 11.08% 0.0%
Consumer Cyclical 12.12% 0.0%
Basic Materials 3.36% 0.0%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

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%.

VO is 22.01% more exposed to the Technology sector than TQQQ (22.01% vs 0.0%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 13.03% higher and 12.12% higher respectively (13.03% vs. 0.0% and 12.12% vs. 0.0%). In total, Basic Materials, Energy, and Utilities also make up 12.30% more of the fund’s holdings compared to TQQQ (12.30% vs. 0.00%).

Holdings

VO - Holdings

VO Holdings Weight
IDEXX Laboratories Inc 0.78%
DocuSign Inc 0.75%
Marvell Technology Inc 0.68%
IQVIA Holdings Inc 0.68%
Chipotle Mexican Grill Inc 0.63%
Veeva Systems Inc Class A 0.62%
Digital Realty Trust Inc 0.62%
Centene Corp 0.62%
Aptiv PLC 0.62%
Carrier Global Corp Ordinary Shares 0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

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

VO TQQQ
Mean Return 1.14 4.65
R-squared 92.22 83.64
Std. Deviation 15.65 50.08
Alpha -2.71 7.29
Beta 1.11 3.37
Sharpe Ratio 0.83 1.1
Treynor Ratio 11.32 15.65

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Standard Deviation of 15.65 with a Treynor Ratio of 11.32 and a R-squared of 92.22. Its Alpha is -2.71 while VO’s Mean Return is 1.14. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Beta of 1.11.

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

VO’s Mean Return is 3.51 points lower than that of TQQQ and its R-squared is 8.58 points higher. With a Standard Deviation of 15.65, VO is slightly less volatile than TQQQ. The Alpha and Beta of VO are 10.00 points lower and 2.26 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

VO vs. TQQQ - Annual Returns

Year VO TQQQ
2020 18.22% 109.85%
2019 31.04% 133.93%
2018 -9.21% -19.65%
2017 19.25% 118.65%
2016 11.23% 11.04%
2015 -1.34% 17.41%
2014 13.76% 56.82%
2013 35.15% 139.98%
2012 15.98% 51.95%
2011 -1.96% -7.77%
2010 25.57% 0.0%

VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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

VO vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VO $10,000 $32,177 14.34%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in VO would have resulted in a final balance of $32,177. This is a profit of $22,177 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

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%.

VO’s CAGR is 46.89 percentage points lower than that of TQQQ and as a result, would have yielded $560,835 less on a $10,000 investment. Thus, VO performed worse than TQQQ by 46.89% annually.


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