You don't need to gamble on tiny ETFs with scant assets to beat the S&P 500. Turns out you can do it just fine with massive ones if you know where to look.
Eight ETFs with at least $33 billion in assets under management, including SPDR Gold Shares, iShares S&P 500 Growth ETF and Vanguard Growth ETF, are outpacing the S&P 500 this year, according to an Investor's Business Daily analysis of data from Morningstar Direct and MarketSurge. All these ETFs rank among the 50 largest ETFs by assets, indicating that they're not just investing in quirky niches that are working out at the moment.
Additionally, all are passive funds where the performance isn't hurt as assets pour in. That's unlike big and active mutual funds, where managers must find more places to put the money if it flows in.
"Unlike with active mutual funds where investors need to worry that a strategy is too big to continue to succeed, passive ETFs are different," says Todd Rosenbluth of Vetta Fi. "These ETFs are simply replicating the exposure of the broader investment style without making active selections. So there are no such legitimate concerns."
Glittering Like Gold
SPDR Gold Shares is the top-performing large ETF this year. The $65 billion in assets fund returned more than 17% this year. That's especially impressive given the ETF, which tracks the price of gold, doesn't pay a dividend.
Surging gold prices are driving the ETF's gains. The price of a troy ounce of gold on Comex is up more than 29% from its 52-week low, says S&P Global Market Intelligence. Surprisingly persistent rises in prices are driving investors to protect their purchasing power with hard assets.
"(The) SPDR Gold Shares (ETF) is benefiting from the rising price of gold amid an increasingly stick inflationary environment," Rosenbluth said.
Go Big Or Go Home
Bigger is better is definitely a theme this year.
Vanguard Growth ETF isn't simply a massive fund in its own right with $125.4 billion in assets. It also holds large stakes in the largest S&P 500 stocks that are working out so well. Among its top holdings are giants like Microsoft, Meta Platforms and Nvidia. All those positions are topping the S&P 500 by a wide margin.
In fact, AI king Nvidia rallied again following its release late May 22 of better-than-expect first quarter results. And Vanguard Growth itself is up roughly 14% this year. And it's not alone. Big holdings in the largest S&P 500 companies are also paying off for $45.7 billion-in-assets iShares S&P 500 Growth and $92 billion-in-assets iShares Russell 1000 Growth ETF. Those ETF are up 16% and 14% this year, respectively.
"Megacap growth focused ETFs are benefiting from the ongoing demand for artificial intelligence and other technologies," Rosenbluth said.
Quality Matters, Too
But investors aren't simply looking at the size of the ETFs and their holdings. Quality matters, too.
Stable cash flow is lifting shares of companies in the $44 billion-in-assets iShares MSCI USA Quality Factor ETF. Some of the quality stocks in the portfolio include the megacap techs like Microsoft and Nvidia. But also firms like ConocoPhillips and Eli Lilly.
For instance, thanks to its blockbuster weight-loss and neurological treatments, analysts think Eli Lilly's adjusted profit per share will surge more than 117% this year and another 38% in 2025.
"Given the market uncertainty, investors have turned to high quality companies," Rosenbluth said.
Top Large ETFs This Year
All have assets of $33 billion or more
| Name | Ticker | Year-to-date return | Net assets ($ billion) |
|---|---|---|---|
| SPDR Gold Shares | 17.29% | $65.4 | |
| iShares S&P 500 Growth | 16.17 | 45.7 | |
| iShares Russell 1000 Growth | 14.11 | 92.3 | |
| Vanguard Growth | 13.97 | 125.4 | |
| iShares MSCI USA Quality Factor | 13.24 | 44.4 | |
| Energy Select Sector SPDR | 12.88 | 39.4 | |
| Financial Select Sector SPDR | 12.60 | 39.9 | |
| SPDR Portfolio S&P 500 | 12.20 | 36.7 | |
| Vanguard S&P 500 | 12.19 | 455.9 |
