In this article, we will take a look at the 10 Best Performing ETFs of the Last 5 Years.
Futures markets have switched from expecting a June rate decrease and potentially another before the end of the year, to no cuts until the autumn, with a low possibility of a follow-up before the end of 2025. Reduced confidence about Fed easing came after the January consumer price index report showed a 0.5% monthly rise, raising the annual inflation rate to 3%, a little higher than December and only marginally lower than the 3.1% reading in January 2024. Excluding food and energy, the news was much worse, with a 3.3% rate indicating that core inflation was growing well beyond the central bank’s target.
Furthermore, persistent inflation and President Donald Trump’s strict trade policies have reignited worries of stagflation. Despite repeated warnings over the last 50 years, stagflation has not materialized as a serious danger to investment portfolios. That said, the dreaded scenario has resurfaced as a major risk for investors in recent weeks, as the potential of trade conflicts and punitive tariffs casts a pall over US growth. Jack McIntyre, portfolio manager for Brandywine Global’s fixed income strategies, believes that stagflation has a decent chance of materializing. He said the following:
“Stagflation has definitely re-emerged as a possibility because we have these policies that could hurt consumer demand even while persistent inflation limits the Federal Reserve’s ability to maneuver. It’s not a zero-possibility scenario any more, by a long shot.”
According to a Bank of America poll of global fund managers released on February 18, the number of investors anticipating stagflation, which the bank defines as below-trend GDP and above-trend inflation, during the next year has reached a seven-month high. At the same time, investors remained optimistic about equities, viewing a trade war as a low-probability danger.
The Labor Department’s report on February 20 showed no evidence that Republican President Donald Trump’s administration’s huge layoffs of federal agency workers and severe expenditure cutbacks were having an impact on the economy. Thousands of federal employees, largely on probation, have been sacked in recent days by billionaire Elon Musk’s Department of Government Efficiency, or DOGE, an agency established by Trump. Of course, However, economists who predict a spillover to the private sector believe it is too early to see negative repercussions, although negative effects aren’t completely off the table either. In that regard, Christopher Rupkey, chief economist at FWDBONDS, said:
“The current round of unprecedented belt-tightening and budget cuts and layoffs in Washington have not become a reality yet in terms of showing up in the national statistics. But actions taken in the early days of the new administration may yet bring about a broader economic slowdown and is frankly a risk factor that economists did not see at the start of the year.”
ETF Trends Dominating The Market
Europe played a significant role in driving ETF growth, with total assets under management (AUM) nearing $2.3 trillion by the end of 2024, helped by the fast expansion of online retail savings accounts. Nonetheless, the US was a driving force behind global ETF growth, with AUM topping $10 trillion by the end of 2024. Moreover, a report by EY states that active ETFs are on their way to becoming an increasingly important source of growth. These ETFs are a rising part of European ETF markets, while in the United States they account for 8% of ETF AUM and over half of net inflows in 2024.
In addition, active ETFs accounted for the vast majority of ETF launches in the United States, Canada, and Australia last year. In the first 10 months of 2024, the United States had 482 new active ETFs launched, compared to 144 indexed ETF releases. Regulatory developments in various countries are also promoting active ETFs. The continued entry of new ETF providers and platforms is increasing competition and specialization in ETF markets. This is fantastic news for investors, implying that now is the ideal time for established ETF providers to expand and for newcomers to enter the market.
Photo by Adam Nowakowski on Unsplash
Our Methodology
For this list, we ranked some of the best performing ETFs by their 5-year share price performance as of February 18, 2024, and arranged them in ascending order. In addition, we have included insights into each ETF’s top holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
10. Invesco S&P 500 Momentum ETF (NYSE:SPMO)
5-Year Share Price Performance as of February 18: 130.89%
The Invesco S&P 500 Momentum ETF (NYSE:SPMO) tracks an index of the S&P 500’s 100 companies with stronger recent price performance than their peers. The approach calculates the percentage change in stock prices over the previous year, omitting the most recent month, and then accounts for volatility. The portfolio is then weighted using a mix of company size and momentum score. SPMO has an NAV of $103.07 and an average daily trading volume of 1.32 million shares.
Amazon.com Inc. (NASDAQ:AMZN) is SPMO’s largest holding. The e-commerce behemoth provides consumer items, advertising, subscription services, and cloud computing. The company also provides digital streaming and artificial intelligence technologies.
On February 10, New Street Research upgraded Amazon.com Inc. (NASDAQ:AMZN) shares, with analyst Dan Salmon upping the price target to $280 from $234 while maintaining a Buy rating. Salmon views AWS as a notable driver of Amazon’s future, with growth catalysts including further AWS collaborations, particularly in AI with Trainium 2.
9. Global X US Infrastructure Development ETF (NYSE:PAVE)
5-Year Share Price Performance as of February 18: 138.80%
The Global X U.S. Infrastructure Development ETF (NYSE:PAVE) seeks to invest in firms that stand to gain from a rise in infrastructure development in the United States, such as those producing raw materials, heavy equipment, engineering, and construction. Overall, the fund invests about 75% of its assets in industrial equities and approximately 20% in the materials sector. These are often cyclical sectors that benefit from economic growth and increased investment spending.
CRH plc (NYSE:CRH), is a prominent global manufacturer of building materials solutions and ranks as the largest holding in the Global X U.S. Infrastructure Development ETF (NYSE:PAVE). The company has operations in 28 countries, contributing to road and key utility infrastructure, commercial construction projects, and outdoor lifestyle with its materials and products.
Back in December, Goldman Sachs initiated coverage of CRH plc (NYSE:CRH) with a Neutral rating and a $112 price target. The firm applauded CRH plc’s solid track record of value-driven capital allocation, citing the company’s 18% CAGR in profits per share over the last decade, which was driven by smart acquisitions. On the other hand, the firm cited a number of obstacles, including a forecast slowdown in U.S. non-residential building investment.
