We recently compiled a list of the 10 Best Performing ETFs of the Last 5 Years. In this article, we are going to take a look at where ProShares UltraPro QQQ (NASDAQ:TQQQ) stands against the other ETFs.
Futures markets have switched from expecting a June rate decrease and potentially another before the end of the year, to no cuts until the autumn, with a low possibility of a follow-up before the end of 2025. Reduced confidence about Fed easing came after the January consumer price index report showed a 0.5% monthly rise, raising the annual inflation rate to 3%, a little higher than December and only marginally lower than the 3.1% reading in January 2024. Excluding food and energy, the news was much worse, with a 3.3% rate indicating that core inflation was growing well beyond the central bank’s target.
Furthermore, persistent inflation and President Donald Trump’s strict trade policies have reignited worries of stagflation. Despite repeated warnings over the last 50 years, stagflation has not materialized as a serious danger to investment portfolios. That said, the dreaded scenario has resurfaced as a major risk for investors in recent weeks, as the potential of trade conflicts and punitive tariffs casts a pall over US growth. Jack McIntyre, portfolio manager for Brandywine Global’s fixed income strategies, believes that stagflation has a decent chance of materializing. He said the following:
“Stagflation has definitely re-emerged as a possibility because we have these policies that could hurt consumer demand even while persistent inflation limits the Federal Reserve’s ability to maneuver. It’s not a zero-possibility scenario any more, by a long shot.”
According to a Bank of America poll of global fund managers released on February 18, the number of investors anticipating stagflation, which the bank defines as below-trend GDP and above-trend inflation, during the next year has reached a seven-month high. At the same time, investors remained optimistic about equities, viewing a trade war as a low-probability danger.
The Labor Department’s report on February 20 showed no evidence that Republican President Donald Trump’s administration’s huge layoffs of federal agency workers and severe expenditure cutbacks were having an impact on the economy. Thousands of federal employees, largely on probation, have been sacked in recent days by billionaire Elon Musk’s Department of Government Efficiency, or DOGE, an agency established by Trump. Of course, However, economists who predict a spillover to the private sector believe it is too early to see negative repercussions, although negative effects aren’t completely off the table either. In that regard, Christopher Rupkey, chief economist at FWDBONDS, said:
“The current round of unprecedented belt-tightening and budget cuts and layoffs in Washington have not become a reality yet in terms of showing up in the national statistics. But actions taken in the early days of the new administration may yet bring about a broader economic slowdown and is frankly a risk factor that economists did not see at the start of the year.”
ETF Trends Dominating The Market
Europe played a significant role in driving ETF growth, with total assets under management (AUM) nearing $2.3 trillion by the end of 2024, helped by the fast expansion of online retail savings accounts. Nonetheless, the US was a driving force behind global ETF growth, with AUM topping $10 trillion by the end of 2024. Moreover, a report by EY states that active ETFs are on their way to becoming an increasingly important source of growth. These ETFs are a rising part of European ETF markets, while in the United States they account for 8% of ETF AUM and over half of net inflows in 2024.
In addition, active ETFs accounted for the vast majority of ETF launches in the United States, Canada, and Australia last year. In the first 10 months of 2024, the United States had 482 new active ETFs launched, compared to 144 indexed ETF releases. Regulatory developments in various countries are also promoting active ETFs. The continued entry of new ETF providers and platforms is increasing competition and specialization in ETF markets. This is fantastic news for investors, implying that now is the ideal time for established ETF providers to expand and for newcomers to enter the market.
Our Methodology
For this list, we ranked some of the best performing ETFs by their 5-year share price performance as of February 18, 2024, and arranged them in ascending order. In addition, we have included insights into each ETF’s top holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A financial analyst in their office, monitoring the daily performance of the stock market.
ProShares UltraPro QQQ (NASDAQ:TQQQ)
5-Year Share Price Performance as of February 18: 234.28%
ProShares recently celebrated the 15th anniversary of the ProShares UltraPro QQQ (NASDAQ:TQQQ) fund, which has become one of the world’s most leveraged ETFs since its inception back in early 2010. The fund’s performance coincides with an era of tremendous technology progress, offering investors the opportunity for 3x exposure to the tech-heavy Nasdaq-100 or lower capital investment requirements. ProShares UltraPro QQQ (NASDAQ:TQQQ) has been recognized as one of the best-performing ETFs in the United States since its debut, managing more than $25 billion in assets.
NVIDIA Corporation (NASDAQ:NVDA), a global leader in the creation and selling of Graphics Processing Units (GPUs), is one of the TQQQ fund’s top stock holdings. Although the company had a wild reaction to competition from DeepSeek AI, investors seem to have processed the news well and are confident NVIDIA’s development in the GPU area is not expected to be challenged anytime soon.
BofA expects NVIDIA Corporation (NASDAQ:NVDA) to slightly outperform forecasts when it publishes its fiscal fourth-quarter results on February 26. That said, the bank’s analysts cautioned that near-term hurdles may weigh on the company’s first-quarter expectations. While NVIDIA’s stock may see post-earnings volatility, the firm expects positive momentum to return as investors look ahead to its upcoming product pipeline. Furthermore, BofA maintains NVIDIA as its top sector selection, highlighting the company’s distinct position as a “computing platform” rather than merely a chipmaker.
Manole Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
Overall TQQQ ranks 2nd on our list of the best performing ETFs of the last 5 years. While we acknowledge the potential of TQQQ as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TQQQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
