Despite a tough finish to the year, the S&P 500 has had an impressive 2024, climbing 25%. While the new year brings some uncertainty, the continued excitement around technology stocks could drive the index even higher in 2025.
There are different ways investors can tap into the S&P 500. They can buy individual stocks or invest in an exchange-traded fund (ETF) that tracks the index.
Another growing trend is investing in sector or thematic ETFs. These funds focus on specific groups of stocks, and they could outperform the standard S&P 500, offering additional benefits aligned with an investor’s goals.
Here are two ETFs worth considering today:
iShares S&P 500 Information Technology Sector ETF
As mentioned, tech stocks—especially those involved in artificial intelligence (AI)—have been a major driver of the S&P 500’s gains in 2024.
This is clearly seen in the impressive performance of the iShares S&P 500 Information Technology Sector ETF (LSE: IUIT), which is up 42.3% so far this year. The ETF’s success is largely due to big names like Nvidia, Meta, and Amazon.
Of course, such strong gains could make the fund vulnerable to a price correction if investors decide to take profits or confidence weakens. But I believe the fund can continue to outperform in the long run. Besides AI, it also offers exposure to other high-growth sectors like cloud computing, cybersecurity, robotics, and autonomous vehicles.
The ETF has delivered an average annual return of 24.9% since 2019, and I expect these strong returns to continue, which is why I have it in my own portfolio.
ProShares S&P 500 Dividend Aristocrats ETF
While the US stock market isn’t particularly known for its dividend culture, investors can still access high-quality dividend stocks through the ProShares S&P 500 Dividend Aristocrats ETF (LSE: NOBL). This ETF focuses on companies that have grown their dividends for at least 25 consecutive years.
It holds 66 different stocks, including well-known names like Stanley Black & Decker, McDonald’s, and IBM. The dividend yield is 2.25%, which isn’t huge, but the consistency and growth of the dividends make it an attractive option for income-focused investors.
Over the past five years, this fund has delivered an average annual return of 10.9%, which is higher than the 6.2% return of the FTSE 100 during the same period. While this ETF may underperform growth stock-focused ETFs in strong bull markets, its stable and growing income stream is still worth considering, depending on an investor’s priorities.
Both ETFs offer distinct benefits: the iShares S&P 500 Information Technology Sector ETF focuses on high-growth tech stocks, while the ProShares S&P 500 Dividend Aristocrats ETF provides steady dividend growth. Which one to choose depends on the investor’s goals.
