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Regardless of a poor finish to the yr, the S&P 500 has loved one other spectacular yr in 2024, rising 25%. Whereas the New Yr is clouded with uncertainty, the enduring buzz round know-how shares may propel the index by means of the roof once more in 2025.
Buyers can achieve publicity to the index in quite a few methods. They’ll purchase particular person shares, or open a place in an exchange-traded fund (ETF) that tracks the S&P 500.
Alternatively, traders can give attention to a selected group of shares utilizing the increasing array of sector or thematic ETFs — a development that’s gaining vital traction.
Focused ETFs like these have the potential to outperform commonplace benchmarks such because the S&P 500. Furthermore, they provide further advantages tailor-made to an investor’s targets.
Listed below are two value consideration at this time.
iShares S&P 500 Info Know-how Sector ETF
As I say, pleasure round tech shares — and specifically these with a hand in growing synthetic intelligence (AI) — has powered the S&P 500’s sensible features in 2024.
This may be illustrated by the gorgeous efficiency of the iShares S&P 500 Info Know-how Sector ETF (LSE:IUIT). It’s up 42.3% within the yr to this point, pushed by tech heavyweights like chipmaker Nvidia, social media big Meta, and e-marketplace Amazon.
As with all funding, features like these depart the fund at risk of a value correction. This will occur if extreme revenue taking units in, or if investor confidence instantly fades.
However I’m assured the fund can proceed outperforming over the long run. In addition to AI, it supplies publicity to different fast-growing applied sciences like cloud computing, cybersecurity, robotics, and autonomous automobiles.
This ETF’s delivered a median annual return of 24.9% since 2019. I anticipate these robust returns to proceed, which is why I at the moment maintain it in my very own portfolio.
ProShares S&P 500 Dividend Aristocrats ETF
The US inventory market isn’t famed for its dividend tradition. Buyers in search of dividends typically flip to London, which boasts a wealthy collection of dependable shares delivering massive and rising payouts.
However traders can nonetheless faucet into these qualities Stateside with the ProShares S&P 500 Dividend Aristocrats ETF (LSE:NOBL). Because the identify suggests, this thematic ETF is one which focuses on dividend progress shares.
It holds shares which have grown dividends for 25 consecutive years or extra. In complete, it holds shares in 66 completely different companies, with main holdings together with family names like Stanley Black & Decker, McDonald’s, and IBM.
The dividend yield right here isn’t the biggest, at 2.25%. However its means to ship dependable passive earnings progress nonetheless makes it value severe consideration.
What’s extra, with capital features additionally taken under consideration, this ProShares fund has delivered a median annual return of 10.9% over the previous 5 years. That’s higher than the 6.2% the FTSE 100 — which is extra well-liked with dividend traders — has delivered over the identical timeframe.
Its bias in direction of dividend shares may see it underperform progress stock-focused ETFs throughout bull markets. Nonetheless, the secure and rising earnings it supplies nonetheless makes it worthy of a detailed look, relying on an investor’s objectives.
