Investors are increasingly turning their attention to exchange-traded funds (ETFs) that have consistently outperformed the S&P 500 Index. The S&P 500, which closed a successful year and is projected to climb as much as 20% in 2026, has seen significant volatility but remains a key indicator of the U.S. economy. Despite its strong performance, several ETFs have demonstrated the potential to deliver even greater returns in the coming year.
Top-Performing ETFs to Consider
Among the standout options, the VanEck Semiconductor ETF (NASDAQ:SMH) is noteworthy. Over the past year, it has gained an impressive 53%, significantly outpacing the S&P 500. This ETF focuses exclusively on the semiconductor sector, which has seen remarkable growth, particularly with the rise of artificial intelligence (AI) technologies. Currently priced at approximately $378, it has surged over 220% in the last five years.
The VanEck ETF contains 25 stocks, with a concentrated focus on its top ten holdings, which together account for 75% of its portfolio. Key players include industry giants such as Nvidia, Advanced Micro Devices, and Broadcom. With $3.8 billion in assets under management and an expense ratio of 0.35%, the fund has achieved an average annual return of 46.83% over the past three years. As long as the AI boom continues, this ETF is well-positioned for another successful year.
Another strong contender is the Vanguard Growth Index Fund ETF (NYSEARCA:VUG), which has outperformed the S&P 500 every year since its inception in 2004. Priced at around $488.15, this fund tracks the CRSP U.S. Large Cap Growth Index. VUG provides exposure to 160 stocks, focusing on high-growth companies, particularly in the tech sector, which represents 62% of its holdings.
This ETF has also delivered a commendable compound annual return of 12.2% since its inception, with a cumulative three-year return of 132.62%. Its top holdings include Nvidia and Apple Inc., which together comprise 22% of the portfolio. With a low expense ratio of 0.04% and a yield of 0.38%, VUG is set to capitalize on the ongoing tech growth, thus maintaining its competitive edge over the S&P 500 in 2026.
Impressive Track Record of Invesco QQQ Trust
The Invesco QQQ Trust (NASDAQ:QQQ) is another ETF that merits attention. This fund tracks the performance of the Nasdaq 100 Index and is one of the most popular ETFs on the market. With an expense ratio of 0.18% and approximately $403 billion in assets under management, QQQ has generated returns 545% higher than those of the S&P 500 since its launch in 1999.
QQQ holds about 100 stocks, predominantly in the technology sector, which comprises 64% of its portfolio. Its top ten holdings include leading companies such as Nvidia, Apple Inc., and Microsoft, representing 22% of the overall portfolio. The fund has seen a cumulative three-year return of 134% and a five-year return of 101%. Currently trading at approximately $620.47, QQQ continues to benefit from the AI surge and remains a solid choice for investors looking to outperform the S&P 500 in 2026.
In summary, while the S&P 500 remains a staple for many investors, the VanEck Semiconductor ETF, Vanguard Growth Index Fund ETF, and Invesco QQQ Trust present compelling alternatives that could yield higher returns. As market dynamics evolve, these ETFs stand out as potential leaders in the investment landscape for the upcoming year.
