Top ETFs That Beat the Market in 2024 and Could Do It Again

Key Points

• ETFs saw inflows of $1.1 trillion in 2024, breaking previous years' records.
• Many funds significantly outperformed the broader market, contributing to ETFs' popularity as a group.
• Three funds that outperformed in 2024 are SPMO, FDG, and HFGO.

2024 was an incredible year for exchange-traded funds (ETFs) as an investment vehicle, with investors funneling a record-breaking $1.1 trillion in new assets into these funds. With new ETFs launching all the time, investors now have more than 12,000 different options from which to choose.

The strength of the performance of the S&P 500 was undoubtedly helpful in drawing investor attention to ETFs, but the wide variety of strategies, approaches, asset classes represented, and other factors present across the space have combined to make ETFs ubiquitous. That said, choosing the "best" ETFs of 2024 to serve as a starting place for considering new investments in 2025 is difficult—some of the top-performing funds employ leverage and daily resets in an effort to amplify momentary returns of particular indices, making them poor choices for buy-and-hold investors.

Three of the more traditional ETFs that nonetheless stood out for their strong performance across 2024 include the Invesco S&P 500 Momentum ETF NYSEARCA: SPMO, the American Century Focused Dynamic Growth ETF NYSEARCA: FDG, and the Hartford Large Cap Growth ETF BATS: HFGO. Further, all three of these funds could continue this momentum into the new year.

Invesco S&P 500 Momentum ETF: Best of the Best Large-Caps

SPMO enjoyed a one-year return as of January 15, 2025, of 46.8%, handily beating the broader market. This factor ETF adopts a common-sense approach: find large-cap stocks that have a recent history of strong price performance and focus in on them narrowly. The fund aims to identify 100 S&P stocks that have outperformed their peers in the last year, excluding the most recent month, after adjusting for volatility.

SPMO's approach favors mega-cap stars like NVIDIA Corp. NASDAQ: NVDA and Amazon.com Inc. NASDAQ: AMZN, so investors with individual positions in some of the most popular U.S. large-caps should double-check SPMO's basket to make sure they aren't accidentally skewing their distribution by doubling up on some of these firms. Further, SPMO is not a particularly broadly diversified momentum fund—though that's not the point—but for an expense ratio of 0.13% this ETF makes a compelling case for inclusion in many portfolios this year.

American Century Focused Dynamic Growth ETF: Strong Performance and Non-Transparent

FDG returned 47.3% in the year leading to January 15, 2025, a strong recommendation for the fund's somewhat unusual approach. This ETF is a so-called active non-transparent fund, meaning that the managers of the fund do not necessarily have to disclose their specific holdings as regularly as for traditional ETFs. As an actively managed fund, it comes with a higher expense ratio than many of its passively managed peers—investors will spend 0.45% to hold FDG.

FDG's mandate is straightforward: focus on mid- and large-cap U.S. firms with strong growth and profitability potential. As a relatively recent fund (it launched in 2020 after the SEC approved active non-transparent funds the prior year), it has a limited performance history. However, the fund's performance in 2024 may be enough to entice some investors in the new year.

Hartford Large Cap Growth ETF: Narrow Basket of Top U.S. Names

HFGO is another actively managed fund that became fully transparent in July 2024. This ETF also has a simple guiding principle, as it seeks growth stocks with early signs of accelerating fundamentals. In practice, this means a portfolio heavily weighted toward information technology names and focused more broadly on U.S. large-caps. While the holdings information is publicly available and updated regularly, the exact methodology behind the section of the constituents of the portfolio is less readily apparent to outside investors.

With just 42 holdings as of January 15, 2025, HFGO's basket is highly concentrated. Its two largest positions—Apple and NVIDIA, respectively—take up a combined 25% or so of invested assets. This makes HFGO a great option for investors looking for broad exposure to many of the biggest names in U.S. stocks.

As an actively managed fund, HFGO's expense ratio is 0.59%. This is higher than many competitors, but the fund's performance history may warrant the larger fee. HFGO has returned 41.7% in the last year, as of January 15, 2025.