glowtop.top

Don’t Buy SPY Until You Look at These 2 ETFs First

2025-11-24 17:40:07 By Robert Williams

Key Points

The S&P 500 has delivered stellar gains, but the SPY isn’t the only choice.
Many other exchange-traded funds are racing ahead, often ahead of the SPY.
These two are worth looking into if you want to outperform the SPY.
Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; learn more here.(Sponsor)

There is a tendency among many investors to hold theSPDR S&P 500 ETF Trust (NYSEARCA:SPY)and nothing else. That’s completely fine if you want to be vanilla, but by doing so, you may be putting massive gains off the table.

Wall Street is coalescing into specific sectors more, and this is a long-term trend you can take advantage of. You can pick ETFs that will benefit from megatrends the most over the coming years to boost your gains. This doesn’t mean you must pick out a narrow AI-focused ETF with a dozen or so holdings. Thousands of ETFs are in the market today, and hundreds have outperformed the SPY for years while having solid diversification. And they are from reputable issuers.

The following two have the firepower to continue outperforming the SPY and are worth looking into:

Industrial Select Sector SPDR Fund (XLI)

Loading stock data...

Industrial Select Sector SPDR Fund (NYSEARCA:XLI)is a passively managed exchange-traded fund. It tracks the performance of the Industrial Select Sector Index. It gives you exposure to industrial companies across various subsectors.

XLI has trailed the S&P 500 historically, but the coming years will be pivotal for this ETF. The last two decades saw the U.S. being stripped of a major portion of its manufacturing capacity, with many industries moving offshore.

China dominates manufacturing today, but the pendulum may swing the other way. Re-industrialization and onshoring were expedited during the Biden era, and could be supercharged further by tariffs in the Trump era. This is already having an impact on XLI’s gains.

XLI has outperformed the SPY this year, up 16.75% year-to-date, against the SPY’s 14.8% gain. I see it outperforming the SPY in the coming years due to tariffs bringing more manufacturing and industry to the U.S.

And even if that does not happen as expected, XLI can still match or slightly lag the SPY.

XLI comes with a 1.37% dividend yield and a 0.08% expense ratio, or $8 per $10,000. SPY gets you a 1.08% yield and charges you $1 more per $10,000.

iShares Russell 1000 Growth (IWF)

Loading stock data...

iShares Russell 1000 Growth (NYSEARCA:IWF)tracks the Russell 1000 Growth Index and gives you exposure to large- and mid-capitalization stocks in the U.S. that have growth characteristics.

The Russell 1000 itself contains exposure to 93% of the total investable U.S. equity market by market cap. This ETF invests in the growth stocks from this index, and has been sturdy enough over the long run to outperform the S&P 500 greatly. Drawdowns here are milder than the QQQ but slightly worse than the S&P 500.

IWF holdsNvidia (NASDAQ:NVDA)with a 12.9% weight, followed byMicrosoft (NASDAQ:MSFT)at 11.67%,Apple (NASDAQ:AAPL)at 11.16%,Broadcom (NASDAQ:AVGO)at 4.69%, andAmazon (NASDAQ:AMZN)at 4.16%.

These top 5 holdings constitute 44.58% of its holdings, a positive if you believe that tech stocks are in a multi-year protracted bullish cycle due to the AI boom. If you look at their earnings, they are rising fast and even outpacing the stock in many cases.

Tech-heavy indexes like the Nasdaq-100 are nowhere near Dot Com-esque valuations yet. The PE ratio has been stuck near 30-35 times earnings since August 2024. To truly reach the euphoric levels of the early 2000s, the Nasdaq-100 would have to trade at 50-60 times earnings, a multiple that was the “norm” two and a half decades ago.

The market may or may not reach that level of exuberance, but more gains seem likely.

IWF comes with an expense ratio of 0.18%, or $18 per $10,000.

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

2025-11-24 17:40:07

-->-->Key PointsThe JEPQ ETF offers a high annual yield, monthly payouts, and exposure to top technology-sector names.However, JEPQ involves higher fees and less diversification than popular index funds like SPY and VOO.Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; learn more here.(Sponsor)-->-->Within the universe of high-yield exchange traded funds (ETFs), theJPMorgan Nasdaq Equity Premium Income ETF(NASDAQ:JEPQ) is among the most popular picks. When you discover the benefits of the JEPQ ETF, you’ll surely understand why many investors turn to this fund for consistent passive income.Sure, you might call the JPMorgan Nasdaq Equity Premium Income ETF a passive income machine. On the other hand, there’s no free lunch in the financial markets and the JEPQ ETF has some drawbacks. Without a doubt, you’ll want to weigh the benefits and disadvantages before committing your hard-earned capital to this fund.JEPQ: Better Than SPY and VOO?Quite possibly, the most passive way to earn income is to simply buy and hold an index fund that tracks (follows) the S&P 500. That way, you’ll probably achieve long-term average share-price appreciation of 8% to 10% per year, plus slightly more than 1% in annual dividends.Those dividend distributions would probably show up in your account once every quarter (three months). You won’t build wealth super-fast that way, but at least you’ll earn some income and get exposure to the 500 large-cap stocks in the S&P 500.Two well-known ETFs that track the S&P 500 are theSPDR S&P 500 ETF Trust(NYSEARCA:SPY) and theVanguard S&P 500 ETF(NYSEARCA:VOO). If you’re interested in the JPMorgan Nasdaq Equity Premium Income ETF, then you probably want to outperform a simple buy-and-hold strategy with SPY or VOO.At first glance, it’s seems easy to beat S&P 500 funds with the JEPQ ETF. After all, the JPMorgan Nasdaq Equity Premium Income ETF features an annual dividend/distribution yield between 9% and 10% (it was around 9.5% recently).Not only that, but JEPQ pays out its cash distributions on a monthly basis, as opposed to the quarterly payouts offered by SPY and VOO. Consequently, you’d have many more opportunities to reinvest the distributions with the JPMorgan Nasdaq Equity Premium Income ETF.Watch Out for JEPQ’s Trade-OffsOn top of all that, you can participate in the growth of the technology sector with the JPMorgan Nasdaq Equity Premium Income ETF. That’s because the JEPQ ETF’s top holdings include established tech names likeApple(NASDAQ:AAPL),Microsoft(NASDAQ:MSFT),NVIDIA(NASDAQ:NVDA),Amazon(NASDAQ:AMZN),Meta Platforms(NASDAQ:META), andBroadcom(NASDAQ:AVGO).Here’s where some investors might be reluctant about the JEPQ ETF, though. While SPY and VOO provide some exposure to large-cap technology stocks, the JPMorgan Nasdaq Equity Premium Income ETF is more tech-heavy and less diversified.SPY and VOO hold around 500 stocks, but JEPQ only holds 106 stocks. Furthermore, the top seven holdings of the JPMorgan Nasdaq Equity Premium Income ETF, all of which are tech stocks, comprise roughly 40% of the fund’s portfolio by weighting.The JEPQ ETF uses options-trading strategies to extract more yield from these stocks, and that’s what makes the fund so appealing. However, you won’t get as much diversification as you would get with SPY or VOO, and not everyone wants to be so heavily invested in a handful of technology stocks.Higher Fees, Lower Share-Price PerformanceAlso, the JPMorgan Nasdaq Equity Premium Income ETF charges higher management fees than SPY or VOO. Specifically, JEPQ automatically deducts 0.35% worth of expenses from the share price on an annualized basis.In contrast, SPY only deducts 0.0945% worth of annual expenses and VOO only charges 0.03%. This might not sound like a big deal in the short term, but higher fees can eat into your total returns over time.In addition, the JPMorgan Nasdaq Equity Premium Income ETF’s share-price performance hasn’t always kept up with SPY and VOO. Over the past 12 months, JEPQ’s share price has increased by approximately 5%.Loading stock data...That’s not a terrible one-year price performance, but it pales in comparison to the 16% share-price gains of SPYand VOO.Loading stock data...Loading stock data...Between the higher fees and the less favorable share-price performance, prospective buyers might think twice before jumping headfirst into the JPMorgan Nasdaq Equity Premium Income ETF.Don’t Be a Yield ChaserThere are yield seekers, and there are yield chasers. The last thing you want to do is chase after ultra-high yield without considering the hidden trade-offs of a fund like the JPMorgan Nasdaq Equity Premium Income ETF.For an attractive annual distribution yield between 9% and 10%, you may end up with less-than-optimal share-price returns. Besides, you’d have to pay higher expenses and accept the risks of a very tech-heavy fund.Instead of being a yield chaser, you can think long and hard about the risks and potential rewards of the JPMorgan Nasdaq Equity Premium Income ETF. Then, you might purchase only a few JEPQ shares and balance out your portfolio with shares of SPY and/or VOO. That way, you’ll be a prudent yield seeker with good long-term prospects.Want Up To $1,000? SoFi Is Giving New Active Invest Users up to $1k in StockLooking to grow your money but unsure where to begin? SoFi Active Invest is offering a limited-time promotion—open an account, fund it with $50 or more, and you could receive up to $1,000 in complimentary stock for Active Invest accounts.From $0 commission trading to fractional shares and automated investing, this app is designed to simplify investing for everyone, whether you’re just starting or already experienced. Its easy to sign up and secure your bonus.(sponsor)DISCLOSURE:INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUEBrokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org).Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 30 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify.Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees.Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org).There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event.Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options [HYPERLINK: https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdfInvesting in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement [HYPERLINK https://www.sofi.com/iporisk/]. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation [HYPERLINK https://support.sofi.com/hc/en-us/articles/360058602892-How-does-SoFi-allocate-IPO-shares].