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The ETFs Running Way Past The S&P 500 Right Now

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  Published in Stocks and Investing on Monday, October 6th 2025 at 6:13 GMT by 24/7 Wall St

Uncommon ETFs Are Outpacing the S&P 500, and the Gains Are Hard to Stop

On October 5, 2025, 247 Wall St released an eye‑opening look at a handful of exchange‑traded funds that have not just beaten the market— they’ve done so with “unstoppable” momentum. The piece, titled “Uncommon ETFs Outperforming the SP 500 With Unstoppable Gains,” chronicles how a surprisingly small group of niche, theme‑driven ETFs have posted returns that dwarf the broad‑market benchmark, and it explores why investors are flocking to these vehicles.

1. Who Are the “Uncommon” ETFs?

The article focuses on ETFs that diverge from the classic “index‑tracking” model. These are:

While VTI is a “classic” broad‑market ETF, the article uses it as a benchmark because it closely tracks the S&P 500. The focus is on the thematic ETFs that are carving out distinct subsectors.

2. How Do They Outperform?

a. Compound Growth in High‑Demand Sectors

The piece details how several of these funds have benefited from explosive growth in areas such as electric vehicles, AI, renewable energy, and biotechnology. For instance, ARKK had a 12‑month return of +41%, while the S&P 500 only delivered +10%. A large portion of that lift comes from the dominance of companies like Tesla and Palantir—both staples in the ARKK portfolio.

b. Leveraged Momentum

Some of the ETFs use a higher weighting in a few hot stocks. The article notes that this “concentration strategy” amplifies gains when those stocks rally, but also amplifies volatility. It gives a detailed chart comparing the beta of ARKK to that of the S&P 500, showing that ARKK’s beta is 1.8—almost double the market.

c. Timing and Market Sentiment

The article cites a Bloomberg interview with a portfolio manager at ARK Investment Management. The manager says that the current “favorable macro‑environment” for clean‑tech and AI—spurred by stimulus measures, corporate ESG commitments, and pandemic‑era digital transformation—has kept the momentum alive.

3. Risks and Caveats

While the headline returns are impressive, the article warns investors to be mindful of:

The piece stresses that “outperformance is not a guarantee of continued gains,” and suggests a balanced approach—allocating a portion of a portfolio to high‑growth ETFs while keeping a core of broad‑market funds.

4. A Quick Dive Into Selected Funds

ARKK (ARK Innovation ETF)
- Strategy: Invests in companies poised to disrupt the economy through technology.
- Top holdings: Tesla (15.3% of portfolio), Palantir (7.8%), Roku (5.4%).
- 12‑month return: 41%.

TAN (Invesco Solar ETF)
- Strategy: Exposure to the solar power sector.
- Top holdings: First Solar (24.1%), SunPower (12.5%).
- 12‑month return: 38%.

QCLN (First Trust Clean Edge ETF)
- Strategy: Focuses on clean‑energy companies with a high “clean‑edge” score.
- Top holdings: Ørsted (17.4%), NextEra Energy (10.2%).
- 12‑month return: 36%.

The article pulls in data from Morningstar’s “Fund Fact Sheet” pages for each ETF, giving readers a deeper look at expense ratios, turnover, and sector allocation.

5. What This Means for Investors

1. Diversification: Even if a thematic ETF is doing well, it can still diversify away from traditional large‑cap tech by investing in different sectors.
2. Alpha Potential: The article argues that investors who want higher alpha may benefit from a small allocation to one or two of these funds, while keeping the bulk in a low‑cost index fund like VTI.
3. Long‑Term Horizon: The narrative is that “the current wave is not a bubble.” The article references a research piece from the Journal of Portfolio Management that models a 5‑year horizon and still finds positive expected returns.

6. Where to Learn More

• ARK Management’s website: Contains detailed prospectuses and quarterly reports.
• Invesco’s fact sheets: Offer a breakdown of holdings and ESG metrics.
• Morningstar’s research: Provides a comparative analysis of expense ratios and performance.
• Bloomberg and CNBC: Both ran follow‑up pieces that dig into specific sectors like AI and clean energy.

7. Bottom Line

The 247 Wall St article paints a compelling picture: a select group of uncommon ETFs, each focused on a high‑growth niche, has surged well beyond the S&P 500’s performance, delivering returns that are hard to ignore. While the risks are non‑trivial—especially the concentration and valuation concerns—their momentum, bolstered by macro‑economic trends and investor sentiment, suggests that these funds are more than a fleeting fad.

For investors willing to accept higher volatility and concentration, a judicious mix of these thematic ETFs can potentially enhance returns. But as the article underscores, the safest play remains a diversified core of broad‑market funds—like VTI—paired with a smaller, well‑researched allocation to the hottest themes of our time.