Investing in exchange-traded funds (ETFs) offers a diversified approach for investors looking to build wealth in the stock market. While the S&P 500 is the most prominent investment vehicle for growth, many investors want exposure to the best ETFs to beat the S&P 500.
In order to identify the top ETFs for outperformance, one must focus on factors such as low expense ratios, strong historical performance, and alignment with emerging trends. This can be in areas like clean energy, cybersecurity and artificial intelligence. If you’re willing to take on a little more risk, these 3 ETFs might be worthy of taking a closer look.
Now, let’s discover the best ETFs to beat the S&P 500 through 2030!
VanEck Semiconductor ETF (SMH)
VanEck Semiconductor ETF (NASDAQ:SMH) is a leading ETF focusing on the semiconductor sector. It has been on a tear this year as demand for advanced semiconductor chips remains exceptionally strong.
The VanEck Semiconductor ETF is a premier investment option due to its relatively low expense ratio of 0.35% and focus on the semiconductor industry. As technology continues to advance at a rapid pace, semiconductors will continue to serve as the backbone of innovation. It will power everything from smartphones to advanced AI applications.
Furthermore, it will also be fueled by trends such as 5G, the Internet of Things (IoT), and electric vehicles. The ETF’s top 5 largest holdings include industry giants like Nvidia (NASDAQ:NVDA), Taiwan Semiconductor (NYSE:TSM), Broadcom (NASDAQ:AVGO), Texas Instruments (NASDAQ:TXN) and Qualcomm (NASDAQ:QCOM).
They account for approximately 50% of the portfolio’s net assets under management. It has also returned 264% compared to the S&P 500’s 70% over the last 5 years.
Invesco S&P 500 Quality ETF (SPHQ)
Invesco S&P 500 Quality ETF (NYSEARCA:SPHQ) stands out as one of the best ETFs to beat the S&P 500 over the next decade. The ETF focuses on high-quality companies exhibiting strong fundamentals, stable earnings and robust balance sheets.
The Invesco S&P 500 Quality ETF’s asset allocation strategy is incredibly diverse. It includes a mixture of large-cap, mid-cap, and small-cap equities across various sectors. However, information technology holds the largest mix accounting for approximately 35% of the ETF’s total weight. By spreading across multiple sectors, the fund can reduce the overall risk to any one company.
Additionally, its passive management style means lower expense ratios which is currently 0.15%. The ETF’s top 5 largest holdings are Nvidia, Broadcom, Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Adobe (NASDAQ:ADBE).
With exposure to quality small, mid-cap, and large-cap stocks, the cost-effectiveness of this ETF makes it a strong contender for outperformance.
Invesco S&P MidCap Momentum ETF (XMMO)
The Invesco S&P MidCap Momentum ETF (NYSEARCA:XMMO) is a premier investment option for several compelling reasons. Mainly, the ETF’s large exposure to midcap stocks with the potential for significant gains.
Mid-cap stocks within the S&P 500 index provide investors with exposure to a diversified portfolio poised for growth. They often exhibit higher growth potential than their large-cap counterparts. Moreover, they also offer greater stability than small-cap investments, striking a balance that appeals to many investors seeking both growth and stability.
The ETF has far outperformed the S&P 500 in 2024, rising 22.5% compared to the S&P’s 6.24%. Its expense ratio remains relatively low, at just 0.34%. Additionally, its top five largest holdings account for approximately 16% of the ETFs total weight. If you have a little more tolerance for risk, XMMO is certainly one of the best ETFs to beat the S&P 500 through 2030.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
