It’s been a rough journey for the S&P 500 in 2025, as tariffs and trade wars have sent markets on a roller-coaster ride. The S&P hit 6,000 for the first time in November 2024, but since then it has pulled back to 5,282.70 as of the market close on April 17, a 12% drop. Many of the most popular exchange-traded funds, or ETFs, even some that have consistently outperformed the index, have also descended with the broad market.
With an average annual return of 12.9% over the past five years, the S&P 500 has a reliable track record, regardless. Despite this, ETFs sometimes have a better opportunity for growth by focusing on specific sectors or industries.
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Many modern ETFs have also been compiled by some of Wall Street’s most intelligent and resourceful fund managers. Investment giants like BlackRock Inc. (ticker: BLK), Vanguard, Invesco, Fidelity and ProShares have all proven themselves with high historical outperformance combined with competitive management fees.
But which ETFs have consistently outperformed the S&P 500 in the past five years? While there’s no guarantee that these funds will continue to win, especially given tech’s outsized influence and volatility, let’s take a deeper look at some ETFs that have beaten the benchmark:
| ETF | 5-Year Return* | 3-Year Return* | 1-Year Return* |
| Invesco S&P 500 Momentum ETF (SPMO) | 18.4% | 15.3% | 15.8% |
| VanEck Semiconductor ETF (SMH) | 24.7% | 17.5% | -7.3% |
| Grayscale Bitcoin Trust ETF (GBTC) | 58.3% | 36.2% | 31.6% |
| Invesco QQQ Trust (QQQ) | 16.3% | 10.2% | 5.5% |
| Roundhill Magnificent Seven ETF (MAGS) | N/A | N/A | 13.3% |
| S&P 500** | 12.9% | 6.3% | 5.2% |
*By market price, including reinvested dividends, as of April 17. Returns over one year are annualized.
**Annualized net total return, including all special and regular dividends, is 14.2% over five years, 7.5% over three years and 6.2% over one year, according to S&P Global.
Invesco S&P 500 Momentum ETF (SPMO)
Equipped with an attractive expense ratio of 0.13%, the Invesco S&P 500 Momentum ETF invests 90% of its total assets in the securities that make up the S&P 500 Momentum Index.
In practice, this means SPMO will track stocks that have been allocated a high “momentum score,” which refers to stocks that are posting stronger growth trends within the index. The fund and index are reconstituted and rebalanced twice per year in March and September, and constituents are weighted by their market capitalization and momentum score.
SPMO holds $5.2 billion in total assets and has outperformed the S&P 500 in the short, medium and long term. Over the past five years, SPMO has an annualized total return of 18.4%, soundly outpacing the S&P’s 12.9%.
VanEck Semiconductor ETF (SMH)
Just a quick look at the roaring success of Nvidia Corp. (NVDA) in recent years should be enough for investors to understand the potential that a semiconductor-focused ETF holds. The VanEck Semiconductor ETF is a behemoth of a fund, with $19.2 billion in total net assets, though it has shed about $7 billion over the past few months during recent market volatility. The fund contains 25 holdings throughout the semiconductor industry, which offers investors exposure to the recent market dominance of artificial intelligence and other tech trends.
With an expense ratio of 0.35%, buying into SMH is fairly affordable, and the fund’s 24.7% average annual return over the past five years underlines its strong momentum against benchmarks like the S&P 500. SMH may be down and out year to date, but once the macroeconomics stabilize, the tide could most certainly turn. As the emergence of generative AI and Web 3.0 continue to grow demand for computational power, the VanEck Semiconductor ETF could be one of Wall Street’s most future-proof funds.
[Read: 7 Best ETFs to Buy Now.]
Grayscale Bitcoin Trust ETF (GBTC)
The Securities and Exchange Commission’s approval of spot Bitcoin ETFs in January 2024 was heralded as a watershed moment for Wall Street’s adoption of cryptocurrencies. Today, the Grayscale Bitcoin Trust remains one of the most effective means for investors to gain exposure to Bitcoin through traditional financial markets.
In 2024, GBTC rallied 137.3%, far surpassing virtually all traditional Wall Street benchmarks and providing direct access to Bitcoin without investors having to buy the cryptocurrency.
With a high expense ratio of 1.5%, access to GBTC can be costly for investors, so only those who are confident in the future of the cryptocurrency and have done a risk-versus-reward assessment should consider this ETF.
The fund itself is solely and passively invested in Bitcoin to reflect the value of BTC held by the trust, less expenses and other liabilities. Its five-year annualized return is 58.3%, stemming from its days as an over-the-counter security. If that’s not impressive enough, its 10-year annual average is 77.6%.
Invesco QQQ Trust (QQQ)
The Invesco QQQ Trust is a go-to ETF that tracks the Nasdaq-100 index. It’s outperformed the S&P 500 in eight out of the past 10 years, all for a reasonable 0.2% expense ratio. It closely tracks the S&P’s one-year return but clearly outpaces it over three and five years, and it thrashed the S&P soundly in full-year 2023.
The Magnificent Seven stocks fill the fund’s top 10 holdings and have driven the ETF to an annualized 16.8% return over the past 15 years. More than half of the fund’s total assets are allocated to the technology sector. Communication services and consumer cyclical stocks hold the next-highest allocations, with 16% and 13% of total assets, respectively. Basic materials, financial services, real estate, energy, industrials, consumer defensive, health care and utilities are each allotted less than 7%.
Roundhill Magnificent Seven ETF (MAGS)
With $1.7 billion in assets under management, the fast-growing Roundhill Magnificent Seven ETF is another popular fund that offers targeted exposure to the Mag 7 stocks, which consist of mega caps Alphabet Inc. (GOOG, GOOGL), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Nvidia and Tesla Inc. (TSLA). It has the distinction of more than doubling QQQ’s return over the past year.
It’s a young fund with a competitive expense ratio of 0.29%, or $29 per year for every $10,000 invested, and it’s an excellent option for investors looking to zoom in on some of the biggest stocks in the U.S. and hold them over the long term. Although it hasn’t been around as long as the others on this list, it’s trounced the S&P 500 (and peers, too) since its inception in April 2023.
The ETF is also rebalanced to equal weight on a quarterly basis, which helps to provide consistent exposure to these big companies.
Posting a one-year gain of 13.3% as of April 17, the Roundhill Magnificent Seven ETF is a fund that deserves consideration for investors looking to beat the market, as it has managed to outperform its closest competitors even during a downturn.
Choose an ETF to Match Your Goals
The ETFs on this list have different areas of focus but have all outperformed against the S&P 500. For investors seeking to embrace a high-performing ETF rather than look to indexes for returns, it’s worth assessing your risk appetite, industries of interest and the technological innovations that you believe in to determine the appropriate fund.
Past performance is no guarantee of future returns, but with the right level of research, it’s possible to buy into an ETF that’s consistently provided growth for investors with a theme that still has plenty to offer.
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5 ETFs That Outperform the S&P 500 originally appeared on usnews.com
Update 01/13/25: This story was previously published at an earlier date and has been updated with new information.
