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5 Multi-Billion Dollar ETFs Beating the S&P 500 YTD

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The S&P 500 Index has been on a remarkable rally this year, crossing the 5,300 milestone for the first time ever, underscoring strong confidence. Solid corporate earnings and rate cut bets have been driving the stocks higher. Renewed AI craze also added to the strong momentum. The benchmark has risen 10.4% so far this year.

The rally has been broad-based with most of the corners of the broad investment world enjoying huge gains. While the list is very long, we have highlighted five ETFs that are beating the S&P 500 Index in the year-to-date time frame and are popular with large AUMs, say more than $20 billion. These include Grayscale Bitcoin Trust (GBTC - Free Report) , iShares S&P 500 Growth ETF (IVW - Free Report) , SPDR Gold Trust ETF (GLD - Free Report) , iShares MSCI USA Quality Factor ETF (QUAL - Free Report) and Vanguard Information Technology ETF (VGT - Free Report) .

All these funds are passively managed, meaning that they aim to replicate the performance of a specific index. By tracking a particular index, liquidity is high for these funds. Unlike actively managed funds, they do not involve frequent trading or active decision-making by fund managers. Instead, they simply mirror the holdings and performance of the target index. As these funds require less trading and research, these have lower fees compared to actively managed ETFs.

Bulls Are Here

According to the latest survey from Bank of America, expectations of interest rate cuts coupled with earnings optimism have made investors the "most bullish" since November 2021. About 82% of global fund managers expect the first rate cut by the Fed in the second half, while 78% say a recession is unlikely in the next 12 months.

Wall Street analysts also have tuned more bullish on the S&P 500 Index on rate cut expectations. One of Wall Street’s most prominent bears, Morgan Stanley, turned positive on the outlook for U.S. stocks by lifting the price target for the S&P 500 to 5,400 from 4,500 (read: ETFs to Bet on Analysts' Bullish Forecast for S&P 500).

Below, we have profiled the abovementioned ETFs:

ETFs in Focus

Grayscale Bitcoin Trust (GBTC - Free Report) – Up 72.4%

The world's largest cryptocurrency was on a tear in the first quarter, reaching a new record of $73,000 amid growing optimism about the tokens following the launch of the Bitcoin ETFs. Another contributor to the digital currency’s hot run is its “halving” event, which reduces the reward for mining new blocks, in April. Now, growing optimism surrounding the approval of a U.S. spot Ethereum ETF is driving the rally in recent weeks.

Grayscale Bitcoin Trust is the world’s largest Bitcoin ETF that enables investors to gain exposure to Bitcoin in the form of security while avoiding the challenges of buying, storing and safekeeping Bitcoin directly. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody. Grayscale Bitcoin Trust has AUM of $20 billion and charges 1.50% in annual fees from investors. It trades in a volume of 10 million shares a day on average.

iShares S&P 500 Growth ETF (IVW - Free Report) – Up 15.6%

Low rates are generally favorable for growth stocks as they reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates typically reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets. Growth stocks, with their potential for high returns, become more appealing to investors in this environment, driving up demand and, consequently, their prices (read: Growth ETFs to Buy as Easing Inflation Fuels Rate Cut Bets).

iShares S&P 500 Growth ETF targets the growth segment of the S&P 500 Index by tracking the S&P 500 Growth Index. It holds 228 stocks in its basket with key holdings in information technology, consumer discretionary and communication. iShares S&P 500 Growth ETF charges 18 bps in annual fees and has amassed $45.7 billion in its asset base. The fund trades in an average daily volume of 2 million shares and has a Zacks Rank #2 (Buy).

SPDR Gold Trust ETF (GLD - Free Report) – Up 12.8%

Gold, which has gained momentum this year on increased central bank buying and safe-haven demand due to increased geopolitical tension, will also continue to shine as lower interest rates would increase the metal’s attractiveness (read: Gold's Bull Run Likely to Continue: ETFs to Add More Shine).

SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $64.5 billion and a heavy volume of about 9 million shares a day. SPDR Gold Trust ETF charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold).

iShares MSCI USA Quality Factor ETF (QUAL - Free Report) – Up 12.6%

Given the market uncertainty, investors have turned to high-quality companies. Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility, elevated margins and a track of stable or rising sales and earnings growth. These products thus reduce volatility when compared to plain vanilla funds and hold up rather well during market swings.

With AUM of $44.3 billion, iShares MSCI USA Quality Factor ETF provides exposure to large and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index and holds 126 stocks in its basket. The ETF charges 15 bps in annual fees and trades in an average daily volume of 1.2 million shares.

Vanguard Information Technology ETF (VGT - Free Report) - Up 11.8%

The technology sector has been one of the top-performing sectors of 2024, buoyed by the artificial intelligence (AI) craze and the prospect of lower rates. NVIDIA's strong performance has also bolstered the growth in the space (read: AI Boom Bolsters NVIDIA's Q1 Growth: ETFs to Tap).

Vanguard Information Technology ETF has AUM of $68.4 billion and provides exposure to 313 technology stocks. It tracks the MSCI US Investable Market Information Technology 25/50 Index. Semiconductors, systems software, technology hardware storage & peripheral, and application software are the top four sectors. Vanguard Information Technology ETF has an expense ratio of 0.10%, whereas volume is solid at nearly 397,000 shares. It has a Zacks ETF Rank #1 (Strong Buy).

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