How can you beat the S&P 500? Buy ETFs that have been successful in 7 of the last 10 years

If you want to invest easily on your own, one of the best ways is to buy ETFs. S&P 500. By purchasing shares of the above exchange traded fund Vanguard 500 Index ETF Or that SPDR S&P 500 ETFGet instant access to a diverse group of 500 of America’s largest companies.

Beating the S&P 500 isn’t easy. In fact, most hedge funds and mutual funds underperform the S&P 500 over long periods of time. This is because the S&P 500 selects from a large pool of stocks and continually updates its holdings, discarding underperforming stocks and replacing them with promising growth stocks.

For example, Jisoo replaced an old home appliance company. Swirl For explosive AI server companies super micro computer. Holding only large, profitable U.S. stocks is another reason why the S&P 500 performs so strongly over time.

However, some funds outperform the overall market index. Read on to see one ETF with a long-term track record of outperforming the S&P 500.

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Grow at a reasonable price

Most stocks are typically grouped into one of two buckets: growth or value. Growth stocks typically have higher growth rates than the general market, while value stocks typically trade at a discount to the S&P 500, as measured by their price-to-earnings ratio.

However, there is also a group of hybrid stocks that have elements of both growth and value, known as “growth at a reasonable price” (GARP). And there is one ETF that specializes in those stocks.

That’s it Invesco S&P 500 GARP ETF (SPGP 0.04%)As you can see in the chart below, it has beaten the S&P 500 in seven of the last ten years and has consistently outperformed it over the past decade.

^SPX data from YCharts

As you can see, the Invesco GARP ETF not only beat the S&P 500, but also moved along the same trajectory as the S&P 500. This means you can win without any additional risk.

What is the Invesco GARP ETF?

The Invesco S&P 500 GARP ETF tracks S&P 500 growth with an affordable index. The index consists of approximately 75 stocks that are rated as having the highest “growth scores” based on earnings and revenue-per-share growth. We evaluate the ‘Quality and Value Composite Score’ based on financial leverage, return on equity, and stock price return over the past three years.

The fund’s five largest holdings are: diamondback energyPermian Basin exploration and production energy companies; steel mechanicsIt is one of the largest steel producers and metal recyclers in the United States. marathon oilrefineries and transportation companies; CF industry, manufacturers of nitrogen fertilizers and other agricultural products; and NucorA steel manufacturer that popularized the mini mill.

Four of the next five top holdings are also energy stocks. In fact, the largest sector in the index is currently Energy, which accounts for 26.1% of the fund, followed by Information Technology at 22%.

Why the GARP ETF Continues to Outperform

The GARP ETF’s standards filter out both overvalued stocks and stocks that aren’t growing as quickly, making the ETF a good choice for beating larger indices.

Most of the Magnificent 7 stocks that led the new bull market are in extended form, and various traditional indicators suggest that the value of the S&P 500 is particularly high in the early stages of the new bull market. For example, the S&P 500’s price-to-earnings ratio is 25.2, while its P/E ratio is 15.3.

Barring an oil price crash that would hammer the energy stocks that make up a significant portion of the GARP ETF, the fund appears well-positioned to beat the S&P 500, as early gains in Magnificent Seven stocks should spread to the rest. As bull markets mature, stock markets mature. Meanwhile, its value will act as a buffer against selling in the broader market.