Forget Index Funds: 3 Active ETFs That Have Crushed the S&P 500 Since 2020

Most people gravitate to index funds due to their simplicity and low fees. While most active ETFs fail to keep up with indices, that’s not true about every actively managed fund. It turns out there are a few active ETFs that have outperformed the S&P 500 in recent years. Adding these picks to your portfolio can provide additional diversification and possibly boost your returns.

ARK Autonomous Technology & Robotics ETF

The ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) gives investors exposure to the next wave of technological innovation. Self-driving cars are starting to show up in cities, and robotics continues to inch closer to mainstream products and services. The fund has a lofty 0.75% expense ratio, but its 56% return over the past year justifies the cost.

The fund only has 37 stocks, and its top 10 positions make up more than half of the portfolio. Cathie Wood manages the fund with her investment team, so it’s no surprise to see Tesla (NASDAQ:TSLA | TSLA Price Prediction) as a top holding. Most of her picks are growth stocks, with more than two-thirds of the portfolio going toward those types of assets.

This fund is positioned to gain value as self-driving cars and robots become more popular. These innovations can change the way people interact with each other and society, and that type of impact can translate into substantial revenue growth for companies that are in the ETF.

Avantis U.S. Large Cap Value ETF

The Avantis U.S. Large Cap Value ETF (NYSEARCA:AVLV) team looks for large-cap stocks with low valuations and high profitability ratios. It only has 0.15% expense ratio despite being an actively managed fund. That’s a lower expense ratio than most passively managed funds.

While this Avantis ETF has some small-cap and growth stocks, the majority of its picks are large-cap and mid-cap value stocks. It has more than 200 holdings, with Micron (NASDAQ:MU) currently as the top position. The fund allocates 26% of its capital into its top 10 holdings.

Industrials, consumer cyclical, finance, tech. and energy do the heavy lifting, with each sector representing more than 10% of total assets. The fund has delivered a 63% return over the past five years, which includes a 9% year-to-date gain.

Tema American Reshoring ETF

The Tema American Reshoring ETF (NYSEARCA:RSHO) focuses on U.S. manufacturing and is well-positioned for AI infrastructure tailwinds. It has a little less than 30 holdings, but all of its top 10 holdings have generated positive returns over the past year. Only one of those picks has underperformed the S&P 500 over the past year, with three of those top 10 holdings up by more than 100% over the past year. 

This ETF has a 0.75% expense ratio, but a 20% year-to-date gain and a 119% return in less than three years highlights its potential as a long-term winner. This fund is heavily allocated in small-cap stocks, which can increase volatility and potentially deliver much higher returns if AI infrastructure continues to grow. While the S&P 500 and Nasdaq Composite focus on the Magnificent Seven and other AI giants, this fund gives investors the opportunity to get exposure to smaller AI players that remain under the radar.