The Vanguard Growth Index Fund ETF Shares (VUG) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VUG and TQQQ? And which fund is better?
The expense ratio of VUG is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare VUG vs. TQQQ. We’ll look at holdings and portfolio growth, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss VUG’s and TQQQ’s risk metrics, annual returns, and performance and examine how these affect their overall returns.
|Name||Vanguard Growth Index Fund ETF Shares||ProShares UltraPro QQQ|
|Category||Large Growth||Trading–Leveraged Equity|
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.
VUG’s dividend yield is 0.57% higher than that of TQQQ (0.57% vs. 0.0%). Also, VUG yielded on average 43.64% less per year over the past decade (17.58% vs. 61.22%). The expense ratio of VUG is 0.91 percentage points lower than TQQQ’s (0.04% vs. 0.95%).
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The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
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%.
VUG is 39.05% more exposed to the Technology sector than TQQQ (39.05% vs 0.0%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 17.78% higher and 16.49% higher respectively (17.78% vs. 0.0% and 16.49% vs. 0.0%). In total, Energy, Basic Materials, and Consumer Defensive also make up 4.25% more of the fund’s holdings compared to TQQQ (4.25% vs. 0.00%).
|Facebook Inc Class A||3.89%|
|Alphabet Inc Class A||3.43%|
|Alphabet Inc Class C||3.22%|
|Visa Inc Class A||1.78%|
|PayPal Holdings Inc||1.6%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
|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 Growth Index Fund ETF Shares (VUG) has a Beta of 1.04 with a Treynor Ratio of 16.13 and a Standard Deviation of 14.76. Its Sharpe Ratio is 1.13 while VUG’s Alpha is 1.81. Furthermore, the fund has a R-squared of 92.48 and a Mean Return of 1.44.
The ProShares UltraPro QQQ (TQQQ) has a Standard Deviation of 50.08 with a Treynor Ratio of 15.65 and a R-squared of 83.64. Its Beta is 3.37 while TQQQ’s Mean Return is 4.65. Furthermore, the fund has a Sharpe Ratio of 1.1 and a Alpha of 7.29.
VUG’s Mean Return is 3.21 points lower than that of TQQQ and its R-squared is 8.84 points higher. With a Standard Deviation of 14.76, VUG is slightly less volatile than TQQQ. The Alpha and Beta of VUG are 5.48 points lower and 2.33 points lower than TQQQ’s Alpha and Beta.
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VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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 VUG would have resulted in a final balance of $46,738. This is a profit of $36,738 over 10 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 43.64 percentage points lower than that of TQQQ and as a result, would have yielded $546,274 less on a $10,000 investment. Thus, VUG performed worse than TQQQ by 43.64% annually.
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