Skip to content

XLV vs. TQQQ: What’s The Difference?

The Health Care Select Sector SPDR Fund (XLV) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. XLV is a SPDR State Street Global Advisors Health fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between XLV and TQQQ? And which fund is better?

The expense ratio of XLV is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%). XLV also has a higher exposure to the healthcare sector and a lower standard deviation. Overall, XLV has provided lower returns than TQQQ over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

XLVTQQQ
NameHealth Care Select Sector SPDR FundProShares UltraPro QQQ
CategoryHealthTrading–Leveraged Equity
IssuerSPDR State Street Global AdvisorsProShares
AUM27.88B12.41B
Avg. Return15.02%61.22%
Div. Yield1.4%0.0%
Expense Ratio0.12%0.95%

The Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% 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%.

XLV’s dividend yield is 1.40% higher than that of TQQQ (1.4% vs. 0.0%). Also, XLV yielded on average 46.20% less per year over the past decade (15.02% vs. 61.22%). The expense ratio of XLV is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

XLV vs. TQQQ - Industry Exposure

XLVTQQQ
Technology0.0%0.0%
Industrials0.0%0.0%
Energy0.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%0.0%
Healthcare100.0%0.0%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.0%
Financial Services0.0%0.0%
Consumer Cyclical0.0%0.0%
Basic Materials0.0%0.0%

The Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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 Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, 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%.

XLV is 100.00% more exposed to the Healthcare sector than TQQQ (100.0% vs 0.0%). XLV’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 Real Estate also make up 0.00% less of the fund’s holdings compared to TQQQ (0.00% vs. 0.00%).

Holdings

XLV - Holdings

XLV HoldingsWeight
Johnson & Johnson9.19%
UnitedHealth Group Inc8.01%
Pfizer Inc4.64%
Abbott Laboratories4.36%
AbbVie Inc4.21%
Thermo Fisher Scientific Inc4.2%
Merck & Co Inc4.17%
Eli Lilly and Co3.87%
Danaher Corp3.61%
Medtronic PLC3.54%

XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.

Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.

TQQQ - Holdings

TQQQ HoldingsWeight
Nasdaq 100 Index Swap Goldman Sachs International45.11%
Nasdaq 100 Index Swap Societe Generale44.73%
Nasdaq 100 Index Swap Bnp Paribas38.05%
Nasdaq 100 Index Swap Bank Of America Na31.53%
Nasdaq 100 Index Swap Citibank Na31.49%
Nasdaq 100 Index Swap Jp Morgan Securities26.2%
Apple Inc7.49%
Microsoft Corp6.69%
Nasdaq 100 Index Swap Credit Suisse International5.9%
Amazon.com Inc5.68%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

XLVTQQQ
Mean Return1.274.65
R-squared58.1983.64
Std. Deviation12.9450.08
Alpha7.757.29
Beta0.73.37
Sharpe Ratio1.131.1
Treynor Ratio21.115.65

The Health Care Select Sector SPDR Fund (XLV) has a Sharpe Ratio of 1.13 with a Alpha of 7.75 and a R-squared of 58.19. Its Standard Deviation is 12.94 while XLV’s Beta is 0.7. Furthermore, the fund has a Treynor Ratio of 21.1 and a Mean Return of 1.27.

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

XLV’s Mean Return is 3.38 points lower than that of TQQQ and its R-squared is 25.45 points lower. With a Standard Deviation of 12.94, XLV is slightly less volatile than TQQQ. The Alpha and Beta of XLV are 0.46 points higher and 2.67 points lower than TQQQ’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

XLV vs. TQQQ - Annual Returns

YearXLVTQQQ
202013.33%109.85%
201920.63%133.93%
20186.3%-19.65%
201721.7%118.65%
2016-2.83%11.04%
20156.82%17.41%
201425.17%56.82%
201341.24%139.98%
201217.56%51.95%
201112.44%-7.77%
20102.91%0.0%

XLV had its best year in 2013 with an annual return of 41.24%. XLV’s worst year over the past decade yielded -2.83% and occurred in 2016. In most years the Health Care Select Sector SPDR Fund provided moderate returns such as in 2011, 2020, and 2012 where annual returns amounted to 12.44%, 13.33%, and 17.56% 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

XLV vs. TQQQ - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
XLV$10,000$42,89915.02%
TQQQ$10,000$593,01261.22%

A $10,000 investment in XLV would have resulted in a final balance of $42,899. This is a profit of $32,899 over 10 years and amounts to a compound annual growth rate (CAGR) of 15.02%.

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%.

XLV’s CAGR is 46.20 percentage points lower than that of TQQQ and as a result, would have yielded $550,113 less on a $10,000 investment. Thus, XLV performed worse than TQQQ by 46.20% 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.

Leave a Reply

Your email address will not be published.