VXF vs. TQQQ: What’s The Difference?

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

The expense ratio of VXF is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%). VXF also has a higher exposure to the technology sector and a lower standard deviation. Overall, VXF has provided lower returns than TQQQ over the past 10 years.

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

Summary

VXF TQQQ
Name Vanguard Extended Market Index Fund ETF Shares ProShares UltraPro QQQ
Category Mid-Cap Growth Trading–Leveraged Equity
Issuer Vanguard ProShares
AUM 114.53B 12.41B
Avg. Return 15.47% 61.22%
Div. Yield 1.19% 0.0%
Expense Ratio 0.06% 0.95%

The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% 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%.

VXF’s dividend yield is 1.19% higher than that of TQQQ (1.19% vs. 0.0%). Also, VXF yielded on average 45.75% less per year over the past decade (15.47% vs. 61.22%). The expense ratio of VXF is 0.89 percentage points lower than TQQQ’s (0.06% vs. 0.95%).

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Fund Composition

Industry Exposure

VXF vs. TQQQ - Industry Exposure

VXF TQQQ
Technology 23.61% 0.0%
Industrials 11.31% 0.0%
Energy 2.46% 0.0%
Communication Services 7.29% 0.0%
Utilities 1.65% 0.0%
Healthcare 15.25% 0.0%
Consumer Defensive 3.09% 0.0%
Real Estate 8.16% 0.0%
Financial Services 12.56% 0.0%
Consumer Cyclical 11.35% 0.0%
Basic Materials 3.26% 0.0%

The Vanguard Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

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%.

VXF is 23.61% more exposed to the Technology sector than TQQQ (23.61% vs 0.0%). VXF’s exposure to Healthcare and Financial Services stocks is 15.25% higher and 12.56% higher respectively (15.25% vs. 0.0% and 12.56% vs. 0.0%). In total, Energy, Consumer Defensive, and Basic Materials also make up 8.81% more of the fund’s holdings compared to TQQQ (8.81% vs. 0.00%).

Holdings

VXF - Holdings

VXF Holdings Weight
Square Inc A 1.2%
Zoom Video Communications Inc 1.04%
Uber Technologies Inc 0.93%
Moderna Inc 0.9%
Blackstone Group Inc 0.83%
Snap Inc Class A 0.8%
Twilio Inc A 0.73%
DocuSign Inc 0.68%
CrowdStrike Holdings Inc Class A 0.63%
Marvell Technology Inc 0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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

VXF TQQQ
Mean Return 1.24 4.65
R-squared 85.73 83.64
Std. Deviation 18.04 50.08
Alpha -3.26 7.29
Beta 1.23 3.37
Sharpe Ratio 0.79 1.1
Treynor Ratio 10.92 15.65

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Sharpe Ratio of 0.79 with a Beta of 1.23 and a Mean Return of 1.24. Its Treynor Ratio is 10.92 while VXF’s R-squared is 85.73. Furthermore, the fund has a Standard Deviation of 18.04 and a Alpha of -3.26.

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

VXF’s Mean Return is 3.41 points lower than that of TQQQ and its R-squared is 2.09 points higher. With a Standard Deviation of 18.04, VXF is slightly less volatile than TQQQ. The Alpha and Beta of VXF are 10.55 points lower and 2.14 points lower than TQQQ’s Alpha and Beta.

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Performance

Annual Returns

VXF vs. TQQQ - Annual Returns

Year VXF TQQQ
2020 32.19% 109.85%
2019 28.04% 133.93%
2018 -9.37% -19.65%
2017 18.1% 118.65%
2016 16.16% 11.04%
2015 -3.26% 17.41%
2014 7.55% 56.82%
2013 38.37% 139.98%
2012 18.48% 51.95%
2011 -3.61% -7.77%
2010 27.55% 0.0%

VXF had its best year in 2013 with an annual return of 38.37%. VXF’s worst year over the past decade yielded -9.37% and occurred in 2018. In most years the Vanguard Extended Market Index Fund ETF Shares provided moderate returns such as in 2016, 2017, and 2012 where annual returns amounted to 16.16%, 18.1%, and 18.48% 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

VXF vs. TQQQ - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VXF $10,000 $34,598 15.47%
TQQQ $10,000 $593,012 61.22%

A $10,000 investment in VXF would have resulted in a final balance of $34,598. This is a profit of $24,598 over 10 years and amounts to a compound annual growth rate (CAGR) of 15.47%.

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%.

VXF’s CAGR is 45.75 percentage points lower than that of TQQQ and as a result, would have yielded $558,414 less on a $10,000 investment. Thus, VXF performed worse than TQQQ by 45.75% annually.


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