Key Takeaways
- ETFs offer investors a broad range of exposure to the stock market, generating less volatility compared to stocks.
- ETFs have delivered some of the best-performing returns over the last 10 years by tapping into high-growth sectors like technology
- There are numerous types of ETFs that focus on specific industries and sectors, balancing growth with stability, which is perfect for building a portfolio that lasts.
Introduction
Exchange-traded funds, ETFs, are good investments when looking to gain exposure across a wide range of a certain sector. Finding the best-performing ETFs can be challenging, so below, we have compiled a list for you.
What Are ETFs?
Put simply, ETFs act similarly to stocks in the sense of investing in a single stock, but instead, an ETF holds numerous shares of other companies. This means when you, the investor, buy into an ETF, you're buying a small portion of all the shares the ETF holds.
ETFs track indexes such as the S&P 500 or tech sectors, giving you instant diversification to those industries. They’re great because they’re easy to trade and let you tap into big trends without sweating over complex financial details.
Best performing ETFs last 10 years
Here's the overview list for top-performing ETFs that have seen a substantial boom over the last 10 years.
- VanEck Semiconductor ETF (SMH) - Best for Tech Boom Chasers
- Invesco QQQ Trust (QQQ) - Best for Broad Tech Exposure
- iShares Semiconductor ETF (SOXX) - Best for Chip Enthusiasts
- Vanguard Information Technology ETF (VGT) - Best for Low-Cost Tech
- iShares Russell Top 200 Growth ETF (IWY) - Best for Balanced Growth
Introducing the criteria for great ETFs
Alright, how did I land on these as the best performing ETFs last 10 years? I focused on a few key things you’d care about.
- Total returns: Analyzing how much the ETF has grown throughout the last decade, including its dividends.
- Consistency: Did these ETFs continue delivering, even during rough patches?
- Sector strength: Are they tied to high-growth industry trends such as tech or AI?
- Cost: Low expense ratios mean more money stays in your pocket.
If the ETF ticks all of these boxes, then they're on our list and can be considered ideal candidates to stabilize and diversify your investment portfolio.
Best for tech boom chasers
VanEck Semiconductor ETF (SMH)
The VanEck ETF tracks US-listed semiconductor companies, giving you complete expsorue to the top 25 companies who are leading the semiconductor charge. They include companies such as Nvidia, TSMC, and other giants.
VanEck uses a market-cap-weighted approach, meaning larger firms like Nvidia and TSMC dominate its holdings, amplifying exposure to industry leaders. This concentrated strategy seeks high growth potential by betting on the "tech boom," making it ideal for investors chasing explosive returns in a single, high-demand sector.
Why the VanEck ETF?
The ETF is laser-focused on holding shares across the semiconductor industry, the backbone of the AI revolution. Throughout the last decade, VanEck has seen a 10-year annualized return of around 24%, a remarkable amount of growth.
Furthermore, SMH saw increased returns due to the surge across the tech sector. The company's assets grew to $24.7 billion, while gaining over 50% of its gain in 2024 alone. This is due to the explosive growth brought by companies such as Nvidia, TSMC, and Broadcom.
However, the ETF has invested significantly in only a handful of chip stocks, so you could feel the hit if the AI hype cools or chip demand dips. If you’re into high-octane growth, though, this one’s top pick.
Best for broad tech exposure
Invesco QQQ Trust (QQQ)
This ETF follows the Nasdaq-100, holding stakes in heavy-hitting stocks such as Apple, Microsoft, and Amazon. It's most notably known because it's your way to gain access to all the biggest stocks across the tech sector.
QQQ uses a modified market-cap weighting, prioritizing the biggest players to provide diversified exposure to the broader tech ecosystem. This strategy targets investors seeking comprehensive access to leading tech firms without the narrow focus of a single sub-sector, balancing growth with some sector variety.
Why Invesco QQQ?
Throughout the last decade, QQQ has posted annualized returns of 17%. If you had invested $10,000, it would be worth $50,000 today. In terms of performance, QQQ holds over $205 billion in assets; in 2023, the ETF jumped by 40% due to a tech rally across the Nasdaq. Innovation in the tech sector will continue to fuel this ETF well into the future.
The ETF's reliance on a single industry does make it vulnerable to that sector. For example, if a tech bubble bursts, then you will see a substantial downward trend, and so you need to monitor how the overall tech market is performing.
Best for chip enthusiasts
iShares Semiconductor ETF (SOXX)
The SOXX ETF tracks the PHLX semiconductor index, creating a portfolio consisting of chipmakers such as AMD, Intel, and Micron Technology. It’s got a broader mix of stocks compared to SMH, and it’s been a top performer with a 22.4% annualized return over 10 years, making it a stable long-term growth ETF.
The ETF uses a market-cap-weighted approach but offers slightly less concentration than SMH by including mid-tier firms alongside giants. This strategy aims for robust growth within the semiconductor space while mitigating some risk through a wider net, appealing to enthusiasts bullish on chips but seeking a balanced sector play.
Why Ishares SOXX ETF?
Looking into SOXX's financials, the ETF currently holds around $15 billion in assets and has skyrocketed by 400% since 2014, driven primarily by the AI boom. If you had placed $10,000 in SOXX 10 years ago, it would be valued at roughly $76,850 today.
However, with a potential geopolitical storm brewing between the US and China, the impending trade war will likely have a negative effect on SOXX. Although, if you're bullish on the semiconductor industry seeing future growth, then SOXX might be a good bet.
Best for low-cost tech
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF follows the MSCI US Investable Market Information Technology Index, giving you 300+ tech stocks like Apple and Nvidia. Known notably for its affordability, 0.10% expense ratio, but still delivers strong returns.
The ETF’s hallmark is its affordability, with a 0.10% expense ratio, aiming to deliver strong tech sector returns at minimal cost. This strategy targets cost-conscious investors wanting comprehensive tech exposure beyond just semiconductors over the long term.
Why Vanguard VGT?
Firstly, Vanguard's returns are strong, offering annualized returns of over 19% throughout the last 10 years. It also offers investors a diverse mix of the tech sector, including a combination of both software and hardware technology.
In terms of its performance, VGT currently holds over $64 billion in assets and has seen gains of over 500% since 2014, mostly driven by the tech sector, notably due to the AI boom. In addition, the ETF's low fees make it a solid choice for investors.
On the other spectrum, the tech rollercoaster, and market correction could drag it down. Considering the US tech sector is taking a hit, ETFs such VGT will feel the impact more than most.
Best for balanced growth
iShares Russell Top 200 Growth ETF (IWY)
The iShares Russell Top 200 Growth ETF tracks the top 200 growth stocks in the Russell 1000, like Microsoft and Tesla. It's quite a diverse ETF, meaning its holdings are not only tech stocks. Its holdings cover industries such as tech, healthcare, and consumer stocks.
The ETF applies a market-cap-weighted approach focused on companies with high growth potential (e.g., strong earnings growth forecasts), offering diversification across industries rather than a single-sector focus. This strategy seeks steady, balanced growth for investors who want exposure to top performers without the volatility of tech-only or sector-specific funds.
Why Ishares IWY?
The ETF has seen a 17.75% annualized return throughout the last 10 years, making it a strong ETF for steady returns and diversification. With over $10 billion in assets, and a 400% decade-long return, IWY is a strong top pick.
The drawback lies with its uniqueness, its diversification. However, IWY sees steady long-term returns, these returns are lower compared to ETFs that focus on single sectors, especially if a boom happens meaning you won't get large immediate returns from this ETF.
Expert insights and analyst ratings
- Analysts are head over heels for SMH’s $24.7 billion in assets and “high-growth,” but its drop from a year-high of $283.07 to $225.09 signals volatility for this tech boom chaser.
- SOXX’s $15 billion AUM and 400% growth since 2014 (from $43.2967 to $203.85) earn stability nods for chip enthusiasts, though trade war fears persist.
- QQQ’s $205 billion and VGT’s $64 billion reflect tech strength, with 2023’s gains still resonating despite a dip from $540.81 to $491.79 (QQQ) for broad and low-cost tech exposure.
- IWY’s $10 billion and 400% decade-long return offer steady appeal for balanced growth seekers, holding firm at $221.26 amidst market shifts.
Conclusion
ETFs are great investment instruments; they are usually the place where most investors either start or park their portfolios for slow, steady, consistent returns. From my experience, I find investing in a variety of ETFs, each specializing in certain sectors, is a sweet spot for me.
If you're looking to learn more about which ETFs to buy into, or other financial instruments for that matter, then I recommend you try Intellectia AI, it's a powerful analytics tool that can simplify complex financial data into digestable actionable insights.
Frequently Asked Questions
Are these ETFs safe bets for the next 10 years?
If history has taught us anything, then theoretically, yes, depending on which ETF you invest in, they can be considered 'safe bets', but you must, of course, do your own financial research before committing any capital to an ETF.
Why are ETFs better than stocks?
It depends on who you ask, but realistically, a stock is a singular instrument that gives the investor a 'stake' in a single company, whereas an ETF offers a broad stake across multiple companies, making them slightly less volatile.
Can I start with a small investment in these?
Of course, many online brokers will offer investors a fractional share function enabling them to invest less than $5 into a financial instrument including ETFs.
