The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between VWO and TQQQ? And which fund is better?
The expense ratio of VWO is 0.85 percentage points lower than TQQQ’s (0.1% vs. 0.95%). VWO also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VWO has provided lower returns than TQQQ over the past ten years.
In this article, we’ll compare VWO vs. TQQQ. We’ll look at annual returns and performance, as well as at their fund composition and industry exposure. Moreover, I’ll also discuss VWO’s and TQQQ’s holdings, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| VWO | TQQQ | |
| Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | ProShares UltraPro QQQ |
| Category | Diversified Emerging Mkts | Trading–Leveraged Equity |
| Issuer | Vanguard | ProShares |
| AUM | 117.28B | 12.41B |
| Avg. Return | 5.79% | 61.22% |
| Div. Yield | 1.98% | 0.0% |
| Expense Ratio | 0.1% | 0.95% |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% 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%.
VWO’s dividend yield is 1.98% higher than that of TQQQ (1.98% vs. 0.0%). Also, VWO yielded on average 55.43% less per year over the past decade (5.79% vs. 61.22%). The expense ratio of VWO is 0.85 percentage points lower than TQQQ’s (0.1% vs. 0.95%).
Fund Composition
Industry Exposure
| VWO | TQQQ | |
| Technology | 17.06% | 0.0% |
| Industrials | 5.95% | 0.0% |
| Energy | 5.48% | 0.0% |
| Communication Services | 11.41% | 0.0% |
| Utilities | 2.55% | 0.0% |
| Healthcare | 5.33% | 0.0% |
| Consumer Defensive | 5.87% | 0.0% |
| Real Estate | 3.13% | 0.0% |
| Financial Services | 18.15% | 0.0% |
| Consumer Cyclical | 16.1% | 0.0% |
| Basic Materials | 8.98% | 0.0% |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has the most exposure to the Financial Services sector at 18.15%. This is followed by Technology and Consumer Cyclical at 17.06% and 16.1% respectively. Real Estate (3.13%), Healthcare (5.33%), and Energy (5.48%) only make up 13.94% of the fund’s total assets.
VWO’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.87%, 5.95%, 8.98%, 11.41%, and 16.1%.
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%.
VWO is 18.15% more exposed to the Financial Services sector than TQQQ (18.15% vs 0.0%). VWO’s exposure to Technology and Consumer Cyclical stocks is 17.06% higher and 16.10% higher respectively (17.06% vs. 0.0% and 16.1% vs. 0.0%). In total, Real Estate, Healthcare, and Energy also make up 13.94% more of the fund’s holdings compared to TQQQ (13.94% vs. 0.00%).
Holdings
| VWO Holdings | Weight |
| Tencent Holdings Ltd | 5.29% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.73% |
| Taiwan Semiconductor Manufacturing Co Ltd | 4.58% |
| Meituan | 1.88% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 1.7% |
| Reliance Industries Ltd Shs Dematerialised | 1.06% |
| Naspers Ltd Class N | 1.01% |
| Vale SA | 0.92% |
| Infosys Ltd | 0.91% |
| China Construction Bank Corp Class H | 0.84% |
VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.
Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.
| 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%.
Risk Analysis
| VWO | TQQQ | |
| Mean Return | 0.45 | 4.65 |
| R-squared | 81.69 | 83.64 |
| Std. Deviation | 17.64 | 50.08 |
| Alpha | -1.36 | 7.29 |
| Beta | 1.06 | 3.37 |
| Sharpe Ratio | 0.27 | 1.1 |
| Treynor Ratio | 3.14 | 15.65 |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a Beta of 1.06 with a Standard Deviation of 17.64 and a Sharpe Ratio of 0.27. Its Alpha is -1.36 while VWO’s R-squared is 81.69. Furthermore, the fund has a Treynor Ratio of 3.14 and a Mean Return of 0.45.
The ProShares UltraPro QQQ (TQQQ) has a Alpha of 7.29 with a Treynor Ratio of 15.65 and a Sharpe Ratio of 1.1. Its Mean Return is 4.65 while TQQQ’s R-squared is 83.64. Furthermore, the fund has a Standard Deviation of 50.08 and a Beta of 3.37.
VWO’s Mean Return is 4.20 points lower than that of TQQQ and its R-squared is 1.95 points lower. With a Standard Deviation of 17.64, VWO is slightly less volatile than TQQQ. The Alpha and Beta of VWO are 8.65 points lower and 2.31 points lower than TQQQ’s Alpha and Beta.
Performance
Annual Returns
| Year | VWO | TQQQ |
| 2020 | 15.32% | 109.85% |
| 2019 | 20.4% | 133.93% |
| 2018 | -14.57% | -19.65% |
| 2017 | 31.38% | 118.65% |
| 2016 | 11.75% | 11.04% |
| 2015 | -15.35% | 17.41% |
| 2014 | 0.6% | 56.82% |
| 2013 | -5.0% | 139.98% |
| 2012 | 18.84% | 51.95% |
| 2011 | -18.68% | -7.77% |
| 2010 | 18.99% | 0.0% |
VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VWO | $10,000 | $13,615 | 5.79% |
| TQQQ | $10,000 | $593,012 | 61.22% |
A $10,000 investment in VWO would have resulted in a final balance of $13,615. This is a profit of $3,615 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
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%.
VWO’s CAGR is 55.43 percentage points lower than that of TQQQ and as a result, would have yielded $579,397 less on a $10,000 investment. Thus, VWO performed worse than TQQQ by 55.43% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
