2 S&P 500 ETFs for Growth and Leverage in a Hot Market

Key Points

• The strong performance of the S&P 500 in recent quarters has prompted interest among investors looking for more than a traditional buy-and-hold strategy.
• Two trending ETFs—SPYG and SPUU—offer alternative approaches to a traditional S&P fund and may allow for greater returns.
• SPYG is specifically focused on growth stocks within the S&P, while SPUU takes a 2x leveraged approach.

To put it mildly, it's been a very good couple of years for the S&P. Following a tepid 2022, the banner S&P 500 index has accelerated growth from 2023 into 2024. Last year, the index surged by more than 23%. As of February 18, 2025, the S&P 500 has continued to climb by more than 4% year-to-date. Of course, many investors are waiting for the other shoe to drop, but for many recent quarters, sitting back and focusing on a basic S&P ETF or index fund has been a very successful investing strategy by many measures.

With the S&P's major gains in recent months, more adventurous investors have turned to alternative fund plays that still focus on this benchmark index to some degree. One idea behind this strategy is that if the S&P 500 is doing as well as it is, employing a more targeted approach or perhaps some leverage may only help to further boost returns for an individual investor. Two S&P ETFs have emerged as top trending funds: the SPDR Portfolio S&P 500 Growth ETF NYSEARCA: SPYG and the Direxion Daily S&P 500 Bull 2X Shares NYSEARCA: SPUU. Both offer advantages, but both also carry risks not found in pure-play S&P 500 funds.

SPYG Balances Growth Exposure Across Key Sectors

Investors often take the S&P 500 as a representation of the broader U.S. equity market, and there are occasions in which investors might want to narrow their focus to a subset of the stocks making up this larger group. The S&P 500 Growth Index is one way to do so—this index selects stocks from the S&P 500 based on their growth characteristics, specifically sales growth, the ratio of earnings change to price, and momentum.

SPYG is a fund targeting the S&P 500 Growth Index and holding a portfolio of just over 200 companies from this subset of the larger S&P 500. The top holdings of the fund are some of the biggest names in the tech space—NVIDIA Corp. NASDAQ: NVDA, Apple Inc. NASDAQ: AAPL, and the like—giving SPYG a distinct information technology sector tilt. However, while about 39% of the portfolio represents tech, communication services, consumer discretionary, and financials stocks all receive significant allocation as well. This makes SPYG a broadly diversified fund despite its tech focus.

Investors interested in the growth corner of the S&P 500 also have other ETF options available to them. For example, both iShares and Vanguard offer funds tracking the S&P 500 Growth Index—the iShares S&P 500 Growth ETF NYSEARCA: IVW and the Vanguard S&P 500 Growth ETF NYSEARCA: VOOG, respectively. But SPYG has the advantage when it comes to both fees and recent performance. SPYG's expense ratio of 0.04% is the lowest of these three funds, and its one-year return as of February 15, 2025, of 31.5%, is slightly higher than the two competitors as well.

SPUU Can Be a Powerful Trading Tool for Tactical Traders

Despite the S&P 500's broad upward trend over the last year, its day-to-day movement has remained full of ups and downs. Case in point: from July 31 to August 5, 2024, the S&P fell by about 6%, though it quickly recovered within just a few more days.

Most investors focused on the S&P 500 will shrug off those short-term movements, particularly when the whole index is trending upward as it has recently. However, risk-tolerant investors with a willingness to monitor and act on small changes can reap significant benefits. SPUU, with its 2x leverage on the S&P 500 on a daily basis, is a great way to do that. While 3x funds exist, this degree of leverage further magnifies the potential for losses. So, 2x is a good option for investors willing to take on a certain degree of leverage without going too far in that direction.

Because it's designed to focus on a single day's performance, it is less helpful to look at SPUU's year-to-date or one-year return, but investors should keep in mind that with an expense ratio of 0.61%, SPUU is one of the most affordable leveraged funds available. Still, it's a riskier play on the S&P 500 and should only be used strategically for short-term plays.