ETFs are great investment vehicles for long-term growth. It provides investors with a simple way of taking advantage of what the stock market offers without all the downside of investing heavily in individual stocks that could cause significant losses.
Investors preparing for retirement by building a stock market portfolio should strongly consider ETFs due to their growth potential and relatively passive involvement. It helps to know that bad news regarding a company or a poor earnings report won’t strongly affect your portfolio, allowing for greater peace of mind.
Increased diversification among ETFs is a large part of their success and investors’ overall interest. It gives investors the ability to capture the growth of a sector or industry. The upside may be less impactful among individual stocks that perform very well, but it still provides solid returns nonetheless.
Below, I discuss three top ETFs that have yielded investors incredible returns over the last year. They have more than doubled the returns of the S&P 500 and Nasdaq within the same period.
Invesco S&P 500 Momentum ETF (SPMO)
Invesco S&P 500 Momentum ETF (NYSEARCA:SPMO) is a fund that invests in stocks within the S&P 500 index with a high momentum score. The fund is comprised primarily of large-cap growth equities. It was inception on Oct. 9, 2015. SPMO also has a decent expense ratio of 0.13%. Its three-month average volume is 476,000. The fund’s assets under management (AUM) are approximately $2.07 billion.
The fund invests primarily in technology stocks, with other notable sectors, including consumer discretionary and communication services.
The fund’s top three holdings, which make up about 30% of its total AUM, are Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
Over this past year, SPMO has performed remarkably well, with total investor returns increasing by 51% due to the increased investor excitement recently, especially among tech stocks.
It offers a fund for investors seeking to invest in large growth stocks with the potential for impressive share price appreciation without a high expense ratio.
VanEck Semiconductor ETF (SMH)
VanEck Semiconductor ETF (NASDAQ:SMH) is a fund that invests in semiconductor-related companies. It tracks the top 25 U.S. semiconductor stocks based on market capitalization. It was inception on Dec. 20, 2011. Its expense ratio is 0.35%, which is fairly high compared to other ETFs. SMH has assets under management of approximately $22 billion. The three-month average volume for the fund is 7.9 million.
The top three holdings of SMH, which total about 40% of the total AUM, include Nvidia, Taiwan Semiconductor Manufacturing (NYSE:TSM) and Broadcom (NASDAQ:AVGO).
Over this past year, the fund’s total returns have increased by 54% due to investors pouring into semiconductor companies regarding technology advancements such as artificial intelligence and cloud computing.
SMH is a solid fund with impressive returns. However, investors should be aware of its above-average expense ratio, which can affect total returns. It’s a great fund for tech enthusiasts.
Invesco S&P MidCap Momentum ETF (XMMO)
Invesco S&P MidCap Momentum ETF (NYSEARCA:XMMO) is a fund that invests in companies with a market cap between $2 billion and $10 billion, with an emphasis on high-momentum companies. The fund was created on Mar. 3, 2005. It has a total expense ratio of 0.34%. The total assets under management for XMMO are $3 billion. Its three-month average trading volume is 475,000.
XMMO comprises numerous industries, the most notable being industrials, consumer discretionary and information technology.
The fund’s top three holdings, which make up about 9% of its total AUM, include Lennox International (NYSE:LII), EMCOR Group (NYSE:EME) and Owens Corning (NYSE:OC).
Over the past year, the fund’s total returns have increased by 41%, partly due to strong earnings growth among many of its holdings.
XMMO is a fund for investors seeking growth potential in stocks that may not be popular but still offer impressive growth potential.
As of this writing, Noah Bolton held a LONG position in MSFT and XMMO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
