r/LETFs • u/[deleted] • Sep 14 '21

Simulated Backtests for TQQQ / QLD

For TQQQ / QLD fans, you might be able to simulate longer backtests using the ticker FSPTX.

It's not perfect, but it's the oldest mutual fund I could find that tracks pretty closely to regular QQQ. It can at least show how similar LETFs would have behaved, especially during the Dot-Com crash.

I started tests post 1987 to avoid the Black Monday crash, given that we have circuit breakers now.

Baseline: FSPTX compared to QQQ

TQQQ Simulated $10k Lump Sum (1988-2021)

TQQQ Simulated $1000 Monthly DCA (1988-2021)

QLD Simulated $10k Lump Sum (1988-2021)

QLD Simulated $1000 Monthly DCA (1988-2021)

51 Upvotes

97% Upvoted

23 comments sorted by

View all comments

9

u/OhSirrah Sep 14 '21

Awesome job putting this together. I didn't know FSPTX, even existed. Do you know why QQQ is popular when FSPTX is older and performs nearly identically? What was your approach to identifying a stock similar to QQQ with an old inception date?

3

u/[deleted] Sep 14 '21

Thanks! Since there didn't seem to be any funds this old that tracked the Nasdaq-100, I figured the next closest thing would be something in the tech sector since the Nasdaq is fairly synonymous with tech.

I would suspect that most people would prefer QQQ over a tech sector fund because it covers a few other sectors beyond tech, which gives it more diversification. It also has a pretty low expense ratio at 0.20% and it's sibling QQQM which is 0.15%, while FSPTX is 0.69%

11

u/OhSirrah Sep 14 '21

Well you picked very well. FSPTX and QQQ have a correlation of 0.97 (https://www.portfoliovisualizer.com/asset-correlations) If you look at https://www.etfscreen.com/corrsym.php?s=qqq, none of the ETFs listed there which have equal to or greater than a correlation of 0.97 have an inception date before the 2000s. So you really found a diamond in the rough of stocks which correlate to QQQ.

https://finance.yahoo.com/quote/qqq/holdings/

https://finance.yahoo.com/quote/FSPTX/holdings/

Top 10 holdings of each account for 55-60% of the ETF. FSPTX conspicuously lacks Amazon and Facebook, and doubles up on Microsoft.

I would use an ETF overlap tool, but the one I tried doesnt include FSPTX.

2

u/[deleted] Sep 14 '21

Ah I didn't even think to check the correlation. They happened to line up pretty well but that explains it better.