4 ETF Sectors That Outperformed the S&P 500 Over the Previous 5 Years

Key Takeaways

Regardless of the turmoil of the COVID pandemic, the S&P 500 had an annualized return of 14.43% the previous 5 years.
A number of ETF sectors have topped the S&P 500 on an annualized foundation over the identical time interval.
Cryptocurrency ETFs led the best way, with one fund up greater than 50%. Listed below are different ETF sectors price a glance.

The previous 5 years have been essential for world markets as we navigated the COVID-era market shock, world financial coverage easing, and the launch of fiscal stimuli, adopted by subsequent market restoration and the winding down of these stimuli. These years additionally witnessed the rise of inflation issues and the ensuing rate of interest hikes in a number of nations.

As if these challenges weren’t sufficient, geopolitical tensions spiked within the Center East and Japanese Europe. America has additionally skilled the identical move of occasions, with its key fairness index, the S&P 500, delivering an annualized return of 14.43% over the past five years, as evidenced by the efficiency of the SPDR S&P 500 ETF Belief SPY.

COVID Period Market Shock

The onset of the COVID-19 pandemic in early 2020 led to an unprecedented market crash. The S&P 500 misplaced greater than 30% of its worth in only a few weeks as lockdowns, supply-chain disruptions and plummeting client confidence weighed closely on the worldwide financial system. Central banks and governments all over the world responded swiftly with aggressive financial and financial insurance policies to stabilize markets and assist financial exercise.

In the US, the Federal Reserve slashed rates of interest to close zero and launched huge asset buy packages, injecting liquidity into the monetary system. Concurrently, the federal authorities rolled out trillions of {dollars} in fiscal stimulus, together with direct funds to households, enhanced unemployment advantages, and assist for companies. These measures not solely prevented a chronic financial downturn but in addition set the stage for a fast market restoration.

Publish-COVID Market Dynamics

Following the preliminary shock, markets started a exceptional rebound, with the S&P 500 reaching new highs by the tip of 2020. Nonetheless, the restoration was uneven, favoring sure sectors and asset courses over others. Because the pandemic reshaped client conduct, expertise adoption accelerated, provide chains developed, and new funding themes emerged.

The Fed Coverage Transition

On account of huge coverage easing amid the pandemic and pent-up demand publish pandemic, U.S. inflation hit a 40-year excessive. We thus noticed a hawkish Fed in 2022. Heightened rising price worries amid super-hawkish cues from the Fed even bummed Wall Avenue in that yr. Nonetheless, back-to-back price hikes helped the U.S. inflation calm down and the Fed began to chop charges over again from September 2024. The yr 2024 witnessed the full variety of cuts in rates of interest to 100 bps.

All of the above-mentioned modifications created alternatives for particular exchange-traded funds (ETFs) to outperform the broader market or the S&P 500. Beneath, we spotlight a number of of them. These ETF areas have topped the S&P 500 on an annualized foundation over the previous 5 years.

Cryptocurrency ETFs

Grayscale Ethereum Belief ETF ETHE – Up 53.8%

Grayscale Bitcoin Belief ETF GBTC – Up 49.1%

Bitcoin costs doubled in 2024 whereas Ethereum costs gained about 40%. The rally was backed by the launch of cryptocurrency-based ETFs, and President-elect Trump’s crypto-friendly stance to make the US “the crypto capital” has pushed the forex within the newest months (learn: Bitcoin to Hit $2,00,000 in 2025? ETFs in Focus).

FANG+

MicroSectors FANG+ ETN FNGS – Up 32.3%

The synthetic intelligence (AI) growth has been one other spotlight over the previous 5 years. The Large Tech is leaving no stone unturned to spice up the realm. Capital investments focused at AI by the Large Tech has been big, inflicting a rally in FNGS ETN.

Supplies ETFs

Sprott Uranium Miners ETF URNM – Up 30.1%

World X Uranium ETF URA – Up 24.8%

Uranium shares surged as a result of AI growth. Nuclear vitality is quickly rising as a alternative for powering AI programs because of its skill to offer a secure, high-output supply of electrical energy. This appears to be a extra dependable vitality supply. Being an integral part in sustainable and dependable vitality era, the rising curiosity in nuclear vitality has led to an optimistic outlook for Uranium. However the provide of uranium is in a crunch, which led to a rally in these ETFs (learn: Nuclear Energy Charging Up to Power AI: Buy ETFs on Dip?).

Semiconductor ETFs

VanEck Semiconductor ETF SMH – Up 29.5%

iShares Semiconductor ETF SOXX – Up 22.6%

That is one more AI winner. The house has been spearheaded by the chip trade behemoth NVIDIA NVDA. NVDA shares have skyrocketed from $6.11 per share to $140.11 over the previous 5 years, explaining the rally in semiconductor ETFs. Not solely NVIDIA, different chip makers have additionally been following the successful swimsuit (learn: Play Foxconn-Led Global Chip Stock Surge With These ETFs).