4 Passively Managed ETFs That Generated Better Returns Than Warren Buffett in 2024

You don’t have to be an active investor to outperform Warren Buffett. Some passively managed ETFs have outperformed Berkshire Hathaway (NYSE:BRK-B) for several years. Many of these ETFs focus on tech stocks like the Magnificent Seven and have made plenty of investors happy. These are some of the top passively managed ETFs to consider.

Invesco QQQ Trust (QQQ)

The Invesco QQQ Trust (NASDAQ:QQQ) is one of the most recognizable ETFs. It’s been tracking the Nasdaq 100 since 1999 and has delivered an annualized 18.8% return over the past five years. It has a 0.20% expense ratio and a 0.53% SEC yield.

QQQ prioritizes the tech sector, with fund managers allocating 52.0% of its total assets to the sector. The fund includes all of the Magnificent Seven stocks within its top 10 holdings and is a top-heavy fund. Those top 10 positions make up 51% of the fund’s total assets.

iShares Semiconductor ETF (SOXX)

The iShares Semiconductor ETF (NASDAQ:SOXX) is another tech ETF that has outperformed Warren Buffett, but its portfolio is more concentrated. The fund only invests in semiconductor stocks, so you won’t get sector diversity with this fund. However, it’s hard to argue with the SOXX ETF’s annualized 21.4% return over the past five years.

Broadcom (NASDAQ:AVGO) is the largest position and makes up 11.1% of the fund. Nvidia (NASDAQ:NVDA) comes in second place with a 7.8% concentration within the fund. SOXX puts 59% of its total assets into its top 10 holdings. The fund has a 0.35% expense ratio and a 0.73% yield.

Technology Select Sector SPDR Fund (XLK)

The Technology Select Sector SPDR  Fund (NYSEARCA:XLK) places all of its assets into tech stocks. It’s technically more diversified than SOXX since XLK invests in all things tech instead of putting all of its eggs into one industry.

XLK has a 0.08% expense ratio and a 0.63% yield. It has delivered an annualized 19.8% return over the past five years, which is enough to outperform Berkshire Hathaway. XLK allocated 62% of its holdings into its top 10 positions. Its top three positions are Magnificent Seven members, but the remaining top seven holdings are other tech companies that have also performed well over the years.

Vanguard Growth Index Fund ETF (VUG)

The Vanguard Growth Index Fund ETF (NYSEARCA:VUG) is the most diversified fund of the bunch, but it still puts a little more than half of its assets into tech. Investing in large-cap tech stocks has been a recipe for success for investors who want to outperform Warren Buffett with passively managed ETFs. 

VUG has had an annualized 17.1% return over the past five years. Investors only have to contend with a reasonable 0.04% expense ratio and can pay it off with the ETF’s 0.42% yield. VUG prioritizes large-cap stocks, and the Magnificent Seven stocks line up its top 10 holdings. VUG allocates 61% of its total assets into the top 10 positions.

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