The Consumer Discretionary Select Sector SPDR Fund (XLY) and the ProShares UltraPro QQQ (TQQQ) are both among the Top 100 ETFs. XLY is a SPDR State Street Global Advisors Consumer Cyclical fund and TQQQ is a ProShares Trading–Leveraged Equity fund. So, what’s the difference between XLY and TQQQ? And which fund is better?
The expense ratio of XLY is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%). XLY also has a higher exposure to the consumer cyclical sector and a lower standard deviation. Overall, XLY has provided lower returns than TQQQ over the past 10 years.
In this article, we’ll compare XLY vs. TQQQ. We’ll look at portfolio growth and holdings, as well as at their annual returns and performance. Moreover, I’ll also discuss XLY’s and TQQQ’s risk metrics, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Consumer Discretionary Select Sector SPDR Fund||ProShares UltraPro QQQ|
|Category||Consumer Cyclical||Trading–Leveraged Equity|
|Issuer||SPDR State Street Global Advisors||ProShares|
The Consumer Discretionary Select Sector SPDR Fund (XLY) is a Consumer Cyclical fund that is issued by SPDR State Street Global Advisors. It currently has 20.21B total assets under management and has yielded an average annual return of 18.86% over the past 10 years. The fund has a dividend yield of 0.63% 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%.
XLY’s dividend yield is 0.63% higher than that of TQQQ (0.63% vs. 0.0%). Also, XLY yielded on average 42.36% less per year over the past decade (18.86% vs. 61.22%). The expense ratio of XLY is 0.83 percentage points lower than TQQQ’s (0.12% vs. 0.95%).
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The Consumer Discretionary Select Sector SPDR Fund (XLY) has the most exposure to the Consumer Cyclical sector at 94.1%. This is followed by Consumer Defensive and Technology at 5.34% and 0.57% respectively. Financial Services (0.0%), Real Estate (0.0%), and Healthcare (0.0%) only make up 0.00% of the fund’s total assets.
XLY’s mid-section with moderate exposure is comprised of Utilities, Communication Services, Energy, Industrials, and Technology stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.57%.
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%.
XLY is 94.10% more exposed to the Consumer Cyclical sector than TQQQ (94.1% vs 0.0%). XLY’s exposure to Consumer Defensive and Technology stocks is 5.34% higher and 0.57% higher respectively (5.34% vs. 0.0% and 0.57% vs. 0.0%). In total, Financial Services, Real Estate, and Healthcare also make up 0.00% less of the fund’s holdings compared to TQQQ (0.00% vs. 0.00%).
|The Home Depot Inc||8.74%|
|Nike Inc B||4.45%|
|Lowe’s Companies Inc||3.58%|
|Booking Holdings Inc||2.35%|
|TJX Companies Inc||2.12%|
XLY’s Top Holdings are Amazon.com Inc, Tesla Inc, The Home Depot Inc, McDonald’s Corp, and Nike Inc B at 22.9%, 13.5%, 8.74%, 4.5%, and 4.45%.
Lowe’s Companies Inc (3.58%), Starbucks Corp (3.44%), and Target Corp (3.12%) have a slightly smaller but still significant weight. Booking Holdings Inc and TJX Companies Inc are also represented in the XLY’s holdings at 2.35% and 2.12%.
|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 Consumer Discretionary Select Sector SPDR Fund (XLY) has a Beta of 1.02 with a Mean Return of 1.47 and a R-squared of 80.84. Its Treynor Ratio is 16.69 while XLY’s Alpha is 6.96. Furthermore, the fund has a Standard Deviation of 15.97 and a Sharpe Ratio of 1.06.
The ProShares UltraPro QQQ (TQQQ) has a Mean Return of 4.65 with a Beta of 3.37 and a R-squared of 83.64. Its Standard Deviation is 50.08 while TQQQ’s Treynor Ratio is 15.65. Furthermore, the fund has a Alpha of 7.29 and a Sharpe Ratio of 1.1.
XLY’s Mean Return is 3.18 points lower than that of TQQQ and its R-squared is 2.80 points lower. With a Standard Deviation of 15.97, XLY is slightly less volatile than TQQQ. The Alpha and Beta of XLY are 0.33 points lower and 2.35 points lower than TQQQ’s Alpha and Beta.
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XLY had its best year in 2013 with an annual return of 42.74%. XLY’s worst year over the past decade yielded 1.66% and occurred in 2018. In most years the Consumer Discretionary Select Sector SPDR Fund provided moderate returns such as in 2015, 2017, and 2012 where annual returns amounted to 9.93%, 22.77%, and 23.6% 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 XLY would have resulted in a final balance of $49,518. This is a profit of $39,518 over 10 years and amounts to a compound annual growth rate (CAGR) of 18.86%.
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%.
XLY’s CAGR is 42.36 percentage points lower than that of TQQQ and as a result, would have yielded $543,494 less on a $10,000 investment. Thus, XLY performed worse than TQQQ by 42.36% annually.
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