Exchange-traded funds are a great way for investors to gain exposure to different industries and fund objectives without having to do all the work of picking stocks and investing in them individually. They provide a much more stress-free investing option for individuals seeking a more hands-off approach to investing.
The rate of returns for many ETFs also exceeds the returns of major stock market indices such as the S&P 500. The risk of loss is also far less than that of individual stocks. However, as I discuss below, ETFs come with an expense ratio or management fee that eats into potential gains, which is important to remember. Overall, ETFs are a great investment vehicle for both novice and advanced investors.
Here are a few ETFs that have recorded strong rates of returns year-to-date that have surpassed the S&P 500 and would be a great portfolio addition.
VanEck Semiconductor ETF (SMH)
VanEck Semiconductor ETF (NASDAQ:SMH) tracks the MVIS U.S. Listed Semiconductor 25, an index comprised of the 25 largest semiconductor companies listed in the U.S.
Its date of inception was Dec. 20, 2011. Its expense ratio is 0.35%, or $35 annually per $10,000 invested. Investors should pay close attention to this metric. It has $24 billion in assets under management. Its one-month average trading volume is roughly 7 million shares.
VanEck Semiconductor ETFs’ top three holdings include Nvidia (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE:TSM), and Broadcom (NASDAQ:AVGO).
Nearly 80% of the fund comprises companies in the U.S., just over 10% are stocks in Taiwan, and 7% are semiconductor companies in the Netherlands.
So far in 2024, SMH performed very well, increasing by over 58% due to the strong investor sentiment surrounding the industry and massive share price growth experienced by the stocks within its holdings. It is a solid fund for investors seeking exposure to the semiconductor industry with continued upside potential.
Invesco S&P 500 MidCap Momentum ETF (XMMO)
The Invesco S&P 500 MidCap Momentum ETF (NYSEARCA:XMMO) tracks the S&P MidCap 400 Momentum Index. It comprises approximately 80 stocks that score high regarding momentum by calculating upward price movement.
XMMO’s expense ratio is 0.34%, similar to SMH. Its date of inception was March 3, 2005. Its one-month average trading volume is roughly 500,000. And its assets under management are $2.1 billion.
The fund allocates 40% to industrials, with the next largest sectors being information technology and consumer discretionary, which comprise 17% and 16% of the fund, respectively.
Invesco S&P 500 MidCap Momentum ETF’s top three holdings include Lennox International (NYSE:LII), Manhattan Associates (NASDAQ:MANH), and Emcor Group (NYSE:EME).
Year-to-date, the fund returned 27% due to its robust investment strategy, particularly surrounding strong buy of industrial stocks.
XXMO is a solid ETF that offers exposure to mid-cap companies with a high return rate.
Russell 1000 Growth ETF (IWF)
The iShares Russell 1000 Growth ETF (NYSEARCA:IWF) tracks the Russell 1000 Growth Index, which provides exposure primarily to large and mid-cap growth companies in the U.S.
Its inception date was May 22, 2000. Its expense ratio is the lowest of those mentioned here, at only 0.19%. Its assets under management are approximately $97 billion. Its average monthly volume is just over 1 million. As of writing, the total number of holdings within the fund is 439.
The fund comprises multiple sectors, including information technology, which makes up roughly 60%, and smaller portions of sectors, such as finance and consumer discretionary.
Russell 100 Growth ETF’s top three holdings include Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Nvidia.
This ETF’s year-to-date return is 21% because it is exposed to market-leading companies that have performed remarkably well recently.
IWF is a growth ETF that offers investors strong returns and potential future upside.
As of this writing, Noah Bolton held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
