Finder's Pick for
Beginners
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
TQQQ vs. QQQ
The best choice for your portfolio depends on your risk tolerance.
While these exchange-traded funds (ETFs) boast similar names and track the same index, the QQQ is better suited to passive investors, while day traders and otherwise active investors may be better off trading the TQQQ. But the best choice for you will ultimately depend on a myriad of factors.
What is the TQQQ?
The ProShares UltraPro QQQ (TQQQ) is a leveraged ETF that tracks the Nasdaq 100. It was created in 2010 and, as of June 2020, had over USD $4.31 billion in assets under management. The fund uses a complex combination of futures, swaps and borrowed money to amplify the movement of the index tracks—in this case, the Nasdaq.
The TQQQ is designed to triple the daily returns of the Nasdaq so that a 1% gain by the Nasdaq would theoretically result in a 3% gain for TQQQ stock investors.
The fund’s expense ratio is 0.95% and returns quarterly distributions to investors.
What is the QQQ?
The Invesco Trust (QQQ) is an ETF that passively tracks the Nasdaq 100. The fund was created in 1999 and, as of June 2020, was the second-most traded ETF in the US. Between 44% and 47% of its holdings are tech stocks, with the rest of the fund divided up between communications, healthcare, consumer discretionary and industrial stocks.
The fund’s expense ratio is 0.2% and returns quarterly distributions to investors.
Finder's Pick for
Free Trades
Finder's Pick for
Commodity Stocks
Finder's Pick for
Global Trading
Is TQQQ a good investment?
By its very nature, the TQQQ is a riskier investment than the QQQ. It aims to amplify the daily returns of the Nasdaq-100 by a factor of three. This means that if the Nasdaq does well, TQQQ stock does really well. And if the Nasdaq drops? Well, the TQQQ plummets by 3X as much.
Because of its volatility, the TQQQ is best used as an intraday investment, which means you buy and sell the fund over the course of a single trading day. This often makes the TQQQ a strong fit for active traders with a high degree of risk tolerance.
Another drawback to consider before you invest is the TQQQ’s expense ratio. Most ETF expense ratios sit at 0.2% or below — like the QQQ. But the TQQQ’s expense ratio is 0.95%. You’ll pay more to invest in this fund, and while it may potentially magnify your gains, it may also widen your losses.
TQQQ performance
The past performance of an ETF is no guarantee of what the fund will do in the future. But tracking the TQQQ may help you compare it to other funds.
The past performance of an ETF is no guarantee of what the fund will do in the future. But tracking the TQQQ may help you compare it to other funds.
Is QQQ a good investment?
The QQQ is considered an aggressive growth fund and is disposed to higher short-term volatility than larger indices like the S&P 500. That said, it’s still considered a viable buy-and-hold investment that has a history of compensating its investors for taking on increased risk with above-average returns.
Historically, QQQ stock has outperformed the S&P 500, with 10- and 15-year returns of 19.8% and 12.8%, beating out the S&P’s 15.4% and 9.1% returns over the same period.
The QQQ is a way to incorporate tech stocks into your portfolio while also adding exposure to large-cap industrial and healthcare companies. You don’t need to hand-pick or monitor individual stocks — the index does that for you. And the QQQ is typically a more stable investment than the TQQQ, which means it’s suitable to be held long-term.
That said, the QQQ is limited in its scope. Unlike the S&P 500, it only tracks 100 stocks, nearly half of which are tech stocks. Should anything happen to the tech sector, your investment in the QQQ will be put at risk.
QQQ performance
How QQQ stock has performed in the past is no guarantee of future performance. But tracking this fund can help you see how it compares to other ETFs.
How to invest in the Nasdaq from CanadaHow to choose
Before you add either of these funds to your portfolio, consider the following:
- Risk tolerance. The TQQQ is exponentially riskier than the QQQ and is only suitable for investors with a high degree of risk tolerance.
- Timeline. The QQQ may work as either a short- or long-term investment, but the TQQQ is typically an intraday trade.
- Amount of capital. Since the TQQQ uses leverage to amplify returns, you could earn as much or more than QQQ stock investment with less capital.
- Investing experience. If day trading isn’t a routine part of your investment strategy, it may be prudent to skip out on TQQQ stock.
Compare brokerage accounts
To invest in either of these ETFs, you’ll need a brokerage account. Review your options below.
1 - 6 of 6
Bottom line
Both the QQQ and TQQQ track the Nasdaq and depend on its performance for returns. But before you add either fund to your portfolio, consider your time horizons and risk tolerance.
Review your account options with multiple brokerages to find the platform that best meets your needs.
Frequently asked questions
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
More investing guides
Online gaming stocks
iGaming is now legal in Ontario. Find out which companies to keep an eye on with our list of 10 top online gaming stocks.
Read more…
Best brokerage signup bonuses in 2022
Enjoy perks like free trades and cash rewards when you open a stock trading account with these online brokers.
Read more…
Popular propane stocks to buy in Canada
Here’s what you need to know about investing in the propane industry, including 3 popular propane stocks to watch.
Read more…
Best blue chip stocks in Canada and the US
Using our proprietary algorithm, we’ve found the best blue chip stocks on the TSX, NYSE and Nasdaq based on price, performance and more.
Read more…
Satellite companies stocks
Want to invest in satellite companies? We’ve put together a list of 6 satellite stocks you should keep your eye on.
Read more…
5 of the best value ETFs
These funds bundle broad market diversification with potentially competitive returns.
Read more…More guides on Finder
-
Apps like Wealthsimple
Learn more about apps like Wealthsimple to find the best trading platform for your unique set of needs.
-
Online gaming stocks
iGaming is now legal in Ontario. Find out which companies to keep an eye on with our list of 10 top online gaming stocks.
-
Inflation stocks
Here are some of the best stocks for inflation periods to reduce the negative impacts of inflation on your portfolio.
-
HSBC InvestDirect Review
Choose from many account and investment types to invest in global markets, but expect to pay high commissions with HSBC InvestDirect, which doesn’t have an app.
-
Flahmingo review
Our Flahmingo review tells you how to buy fractional shares of some of your favourite US companies with as little as $1.
-
Popular propane stocks to buy in Canada
Here’s what you need to know about investing in the propane industry, including 3 popular propane stocks to watch.
-
Best blue chip stocks in Canada and the US
Using our proprietary algorithm, we’ve found the best blue chip stocks on the TSX, NYSE and Nasdaq based on price, performance and more.
-
How to buy SolarCity stock
SolarCity stock is no longer trading. The only way to back SolarCity now is through the sustainable energy giant that acquired it—Tesla.
-
NFT Glossary: A to Z
What exactly is WAGMI? Here’s a list of common terminology and slangs used by NFT communities on social platforms like Twitter, Discord and Reddit.
-
Top crypto games in 2022
Discover the latest and most popular GameFi titles, project details, upcoming launches and more in this comprehensive crypto game list.