Top ETFs Outperforming the Market for Five Years Running

Aline Medeiros | June 26, 2024

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  • Consistent Outperformance: Six ETFs have surpassed the S&P 500 annually over the past five years.
  • Geographic Diversity: The top ETFs include U.S.-listed funds, a pan-European fund, and a Taiwan-listed fund.
  • Resilience in Down Markets: In 2022, these ETFs mitigated losses better than the S&P 500.

In a remarkable display of resilience and strategic investing, six exchange-traded funds (ETFs) have outperformed the S&P 500 index annually for the past five years, according to a recent analysis by CNBC Pro. This impressive achievement includes four U.S.-listed ETFs, a pan-European ETF managed by JPMorgan, and a Taiwan-listed ETF, each consistently surpassing the U.S. benchmark’s gains every year since 2019, based on data from FactSet.

Diverse and Resilient Performers

The U.S. ETFs that have demonstrated consistent outperformance over this five-year period are the S&P 1500 Composite Stock Market ETF, Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF, First Trust RBA American Industrial Renaissance ETF, and Invesco S&P 500 Quality ETF. Additionally, the JPMorgan U.S. Research Enhanced Index Equity UCITS ETF, listed across the UK, Italy, Germany, and Switzerland, is notable as the only actively managed fund in this elite group, continuing its strong performance into 2024. In Asia, the Taiwanese dollar-denominated Sinopac TAIEX ETF has also outperformed the S&P 500 in local currency terms.

Weathering the 2022 Market Downturn

In 2022, when the S&P 500 fell nearly 20%, these six ETFs managed to limit their losses, showcasing their resilience. This ability to weather downturns while still delivering superior returns over the long term highlights the strategic value these funds can bring to a diversified investment portfolio.

Spotlight on the Top Performer

Leading the pack is the First Trust RBA American Industrial Renaissance ETF (ticker: AIRR), which has delivered a cumulative total return of 178% over the past five years, significantly outpacing the S&P 500’s 112% gain. This ETF tracks the RBA American Industrial Renaissance Index, offering investors exposure to small and mid-cap U.S. companies in the industrial and community banking sectors. Stocks included in this fund are drawn from the Russell 2500 index, requiring at least 75% of revenue from domestic operations and a positive 12-month forward earnings consensus estimate.

Strategic Implications for Investors

The consistent outperformance of these six ETFs underscores the potential benefits of diversifying investments beyond the S&P 500. With funds spanning various regions and sectors, investors can achieve superior returns by incorporating these high-performing ETFs into their portfolios. As these funds continue to demonstrate robust returns and resilience, they present compelling options for investors looking to enhance their investment strategies and mitigate risks.

In conclusion, these six ETFs not only highlight the advantages of a diversified investment approach but also offer a glimpse into the potential for achieving higher returns through strategic fund selection and management. For investors seeking to outperform the market, these ETFs provide valuable opportunities to explore.