Post Content
-
VanEck Semiconductor ETF gained 53% in the past year with 75% of its portfolio concentrated in just 10 holdings.
-
Vanguard Growth Index Fund ETF has beaten the S&P 500 every year since its 2004 inception.
-
Invesco QQQ Trust generated 545% more returns than the S&P 500 since its 1999 launch.
-
Amazon Prime members: Do not miss this bonus
The S&P 500 closed a winning year and is expected to climb as much as 20% this year. The broad market index saw several ups and downs throughout 2025 but continues to remain a smart investment. Despite the risks, it is expected that the S&P 500 will hit 7700 in 2026. It achieved double-digit gains for three consecutive years, and the upward momentum could continue.
The index offers exposure to the top U.S. stocks and speaks a lot about the overall economy. While the S&P 500 is considered a great investment, there are several exchange-traded funds that outperform it. If you’re ready to diversify your portfolio with ETFs, here are three that can beat the S&P 500 this year.
The VanEck Semiconductor ETF (NASDAQ:SMH) is one of the best-performing ETFs of the last five years and has gained 53% in the past year, beating the S&P 500. It jumped over 220% in the past five years and is exchanging hands for $378 today. As the semiconductor sector boomed, this ETF had some of its best days. It is set for another winning year and could beat the S&P 500 again.
The fund offers exposure to 25 stocks and tracks the MVIS US Listed Semiconductor 10% Capped ESG Index. It is a pure-play semiconductor ETF that is stacked with the leading chip stocks. The fund has $3.8 billion in assets under management and an expense ratio of 0.35%. In the last three years, SMH has achieved an average annual return of 46.83%.
Since it holds only 25 stocks, the top 10 holdings make up 75% of the portfolio, and they include industry stalwarts such as Nvidia, Advanced Micro Devices, Broadcom, Micron Technology, Qualcomm Inc., and Intel. These companies are delivering the kind of growth that justifies their valuation and carry a high upside potential. It builds a portfolio based on the size, which means the largest companies have the highest holding. Hence, Nvidia and Taiwan Semiconductor Manufacturing account for about one-third of the portfolio.
As long as the AI boom continues, VanEck Semiconductor ETF can benefit. The S&P 500 is soaring due to the same momentum of the AI industry; however, SMH is purely focused on the sector and can generate higher returns. It looks like a good ETF set to outperform the S&P 500 again.
Vanguard’s Growth Index Fund ETF (NYSEARCA:VUG) tracks the CRSP U.S. Large Cap Growth index. It gives exposure to the best players in the AI race and has managed to beat the S&P 500 every year since its inception in 2004.
The ETF holds 160 stocks and invests aggressively in the stocks that deliver the highest returns. The index rebalances each quarter and removes the stocks that do not meet its criteria. This allows for the best stocks to remain in the ETF. By holding only 160 stocks, the ETF ensures top quality and has no exposure to the poor performers. It has been a stellar performer over the past five years, and the current economic backdrop is favorable for the AI sector.
VUG continues to remain tech heavy, with 62% of the fund in the technology sector. However, it offers diversification and invests in consumer discretionary, financials, and healthcare. It has the highest allocation in Nvidia and Apple Inc., which form 22% of the portfolio. Other stocks in the top 10 holdings include Microsoft, Broadcom, Alphabet, Meta Platforms, and Eli Lilly. VUG has a yield of 0.38% and an expense ratio of 0.04%.
The Vanguard Growth Index Fund ETF has generated a compound annual return of 12.2% since inception. Its cumulative 3-year return is 132.62%, and its 5-year return is 97.96%. The fund has gained 19.84% in a year and is exchanging hands for $488.15.
I believe the technology sector will continue to drive growth this year, and it will take the broader market higher. This means VUG could beat the S&P 500 again in 2026.
The Invesco QQQ Trust (NASDAQ:QQQ) tracks the performance of the Nasdaq 100 index and is one of the most popular ETFs today. It has an impressive track record and has outperformed the S&P 500 three times in a row.
The fund holds the 100 most valuable non-financial companies in the Nasdaq 100, and it has been a steady winner. QQQ holds about 100 stocks and has an expense ratio of 0.18%. It has $403 billion in assets under management.
Since its launch in 1999, the fund has generated 545% more returns than the S&P 500. It is one of the oldest ETFs, with 25 years of history. The fund has rallied, driven by the AI boom, and allocates 64% towards the technology sector. It also offers diversification by investing in consumer discretionary, healthcare, and telecommunications.
Its top 10 holdings include the best tech stocks, such as Nvidia, Apple Inc., Microsoft, Tesla, Meta Platforms, Amazon, Broadcom, and Alphabet. It is top-heavy with the top 10 constituting 48% of the portfolio. The top three holdings, Nvidia, Apple, and Microsoft, form 22% of the portfolio.
While the fund isn’t exclusive to tech stocks, it has generated significant returns driven by the tech companies. It has generated a cumulative 3-year return of 134% and a 5-year return of 101%. QQQ has gained 22% in a year and is exchanging hands for $620.47.
If you spend a good amount on Amazon, this card could easily put $100s back in your pocket every year. Even better, you could get approved extremely fast — and if you are, you’ll receive an insanely valuable welcome bonus deposited straight into your Amazon account for immediate use.
No hoops or extra spending. Get approved, and the bonus is yours. If you shop at Amazon or Whole Foods, this card could help you earn meaningful cash back from purchases you’re already making. This offer won’t last forever, and for Prime members, it’s basically a no-brainer.
Amazon Prime members: See what you could get, no strings attached
Terms and Privacy Policy