I’m generally not a fan of chasing returns, whether they be in individual stocks or in mutual funds or exchange traded funds (ETFs). However, I also know that investors look for above-market returns, and want to at least check out the funds that outperformed broader indexes to see what companies these funds are invested in, and why there’s some sort of outperformance differential.
Key Points
- Creating passive income via investing in ETFs can seem like a good idea, but many don’t beat benchmarks like the S&P 500.
- Here are three that have, and why they look like buying opportunities here.
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To be honest, I’m a creature of curiosity as well, so this is one educational exercise I thought I’d dive into to provide some value to readers as well. I’m looking for income-focused ETFs that have outperformed the S&P 500 on a year-to-date basis (I put the end of September as the cut off date, for simplicity’s sake).
As of Sep. 30, the S&P 500 produced a year-to-date return of around 14.5%, so let’s dive into three income ETFs that managed to beat this benchmark and why.
Laffer Tengler Equity Income ETF (TGLR)
Loading stock data...One ETF I haven’t touched on in the past, but which has clearly been a winner thus far this year, is the Laffer Tengler Equity Income ETF (TGLR). Shares of TGLR are up more than 20% at the time of writing, providing investors with a spread of around 6% over and above the performance of the benchmark S&P 500 index.
What’s impressive about this performance is the fact that the Laffer Tengler Equity Income ETF is concentrated on large-cap U.S. stocks. Given the high concentration of mega-cap stocks within the S&P 500 (indices are typically weighted by market capitalization), one might expect to see much more consistent performance.
Now, both funds do provide investors with very high correlation to the same assets. But for a fund like TGLR that has an even more aggressive size and quality tilt, one can expect to see outperformance and underperformance, depending on the point in the market cycle we’re in.
For those who think this rally can continue, and want to invest in an ETF that uses a 12-factor model to pick stocks on the basis of valuation and dividend potential, this is a great way to go.
Franklin U.S. Core Dividend Tilt ETF (UDIV)
Loading stock data...Another top dividend-focused ETF which managed to beat the market (excluding its dividend yield of 1.5%, still higher than the S&P 500’s) is the Franklin U.S. Core Dividend Tilt ETF (UDIV). This ETF is up approximately 15.5% this year, driven by strong growth seen in the a wide range of sectors.
Unlike the other ETFs on this list that have tilted their portfolios more aggressively toward tech stocks, UDIV has a more balanced and moderate portfolio of a range of companies in varying industries. Now, these companies clearly have outsized growth potential, or this fund would not have beaten the overall S&P 500 since the beginning of the year. But I also think this fund’s core holdings having higher dividend yields than other comparable income ETFs does signal a trend which could be coming to the surface – more investors want to own income-paying equities as interest rates come down.
For investors who think the Federal Reserve will cut interest rates again, this is a top ETF to consider right now. At least, that’s my view.
ProShares S&P Technology Dividend Artistocrats ETF (TDV)
Loading stock data...Last, but certainly not least on this list of income ETFs that have outperformed the broader market is the ProShares S&P Technology Dividend Aristocrats ETF (TDV). This ETF has posted a year-to-date performance of around 16.5%, so investors in this fund have had even better of a run than those in SPY, at least thus far in 2025.
That shouldn’t make too many investors confused, since this ETF is almost entirely tech focused.
As is the case with other market-beating funds, it’s really impossible to beat the S&P 500 without being even more overweight tech than the broader index. That’s the case here, with the TDV ETF tracking the S&P 500 Technology Dividend Aristocrats, a group of companies that have maintained dividends for at least seven years.
What’s interesting about this fact is that many of the “Magnificent 7” and similar mega-cap tech stocks either don’t pay a dividend, or haven’t for seven years. Thus, the quality of companies within this portfolio, and the selection process behind the scenes does appear to be world-class.
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