TQQQ vs. QQQ: Which Is Better? (2024)

FAQs

TQQQ vs. QQQ: Which Is Better? ›

QQQ tracks the Nasdaq-100 Index passively, while TQQQ is highly levered. TQQQ seeks daily returns that are three times those of the QQQ (before fees and expenses.) QQQ experiences smaller price fluctuations and is considered to be less risky than TQQQ.

QQQ - Volatility Comparison. ProShares UltraPro QQQ (TQQQ) has a higher volatility of 11.77% compared to Invesco QQQ (QQQ) at 3.95%. This indicates that TQQQ's price experiences larger fluctuations and is considered to be riskier than QQQ based on this measure.

While the Fund has a daily investment objective, you may hold Fund shares for longer than one day if you believe it is consistent with your goals and risk tolerance. For any holding period other than a day, your return may be higher or lower than the Daily Target. These differences may be significant.

Leverage risk

TQQQ's triple leverage can significantly magnify losses. As a result, it is a highly volatile investment and is generally considered unsuitable for long-term investing.

QQQ appears to be the single best long-term investment option for investors seeking total returns due to its ability to expose holders to top U.S. companies on an ongoing basis. The Nasdaq 100 has consistently outperformed the S&P 500 in terms of total returns, making it a favorable choice for long-term investors.

Leveraged ETF prices tend to decay over time, and triple leverage will tend to decay at a faster rate than 2x leverage. As a result, they can tend toward zero.

ProShares UltraPro QQQ had a return of 24.87% year-to-date (YTD) and 111.05% in the last 12 months. Over the past 10 years, ProShares UltraPro QQQ had an annualized return of 38.12%, outperforming the S&P 500 benchmark which had an annualized return of 10.90%.

Although you can invest in the TQQQ in the long-term, market analysts advise against it, stating that the TQQQ is a highly volatile leveraged ETF. To learn more about ETF trading through CFDs, visit our page here.

The QQQ gained 18.1% annually over the past 10 years. That tops all of the nearly 300 ETFs in the category. That easily outpaces the 12.6% average annual gain of the SPDR S&P 500 ETF Trust (SPY) — the cornerstone of most investors' portfolios. And the QQQ is cheap, only charging 0.2%.

Bottom Line on Leveraged ETFs

Leveraged ETFs decay due to the compounding effect of daily returns, volatility of the market and the cost of leverage. The volatility drag of leveraged ETFs means that losses in the ETF can be magnified over time and they are not suitable for long-term investments.

Can TQQQ fail? ›

TQQQ can theoretically go bankrupt (eg if one of their SWAP counterparties (eg Credit Suisse previously) fails but there are extensive bankruptcy mitigants in place to prevent this (eg daily SWAP cash / TBill settlement of Swap margining, several different swap counterparties.

Investors should note that TQQQ's leverage resets on a daily basis, which results in compounding of returns when held for multiple periods. TQQQ can be a powerful tool for sophisticated investors, but should be avoided by those with a low risk tolerance or a buy-and-hold strategy.

Pay attention to the impact of volatility decay！ When investing in leveraged ETFs like TQQQ, investors need to be aware of the impact of volatility decay. For example, in a volatile market, if the Nasdaq 100 Index drops by 10% in a day, TQQQ will drop by approximately 30%.

QQQ tracks the Nasdaq-100 Index passively, while TQQQ is highly levered. TQQQ seeks daily returns that are three times those of the QQQ (before fees and expenses.) QQQ experiences smaller price fluctuations and is considered to be less risky than TQQQ.

The symbol for TQQQ is TQQQ and it is traded on the NASDAQ (NASDAQ Stock Exchange). Several short-term signals are positive and we conclude that the current level may hold a buying opportunity, as there is a fair chance for TQQQ ETF to perform well in the short-term period.

The QQQ ETF offers buy-and-hold investors low expenses and long-term growth potential with enough diversification to avoid the risks of betting on one company. On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps.

Average Return. In the past year, QQQ returned a total of 31.29%, which is higher than VOO's 27.22% return. Over the past 10 years, QQQ has had annualized average returns of 18.44% , compared to 12.65% for VOO. These numbers are adjusted for stock splits and include dividends.

TQQQ Dividend Information

TQQQ has a dividend yield of 1.07% and paid $0.70 per share in the past year. The dividend is paid every six months and the last ex-dividend date was Mar 20, 2024.

Cons of TQQQ

Expenses: Most ETFs have expense ratios below 0.20%, whereas the expenses for TQQQ are 0.95%, or $95 for every $10,000 invested.