Three diversified stock ETFs have delivered annual returns of 26% to 35%, outpacing the 25% gain from the recent Los Angeles Lakers sale-highlighting how accessible investment vehicles can rival even high-profile sports assets
For most investors, owning a professional sports franchise like the Los Angeles Lakers is out of reach. Yet, the recent sale of the Lakers for $12.5 billion-up from $10 billion just a year ago-spotlights the kind of returns that attract headlines. That 25% annual gain is impressive by any standard, but several widely available stock ETFs have quietly delivered even stronger results over the same period, without requiring billionaire status or a seat at the NBA owners' table.
While the Lakers' sale return is a rare event, the performance of certain exchange-traded funds (ETFs) over the past year demonstrates that diversified stock investing can offer competitive, and sometimes superior, gains. These funds provide exposure to hundreds or even thousands of companies, spreading risk and making high returns more accessible to ordinary investors.
Three ETFs That Beat the Lakers' Return
The Invesco Nasdaq 100 ETF (QQQM) posted a 26% total return over the past year, narrowly edging out the Lakers' 25% gain. This ETF tracks the tech-heavy Nasdaq-100 index, which has outperformed the broader S&P 500 in most years over the past decade. Its portfolio includes major technology names such as Nvidia, Apple, Alphabet, Microsoft, and Amazon, and it charges a relatively low expense ratio of 0.15%.
The Schwab U.S. Dividend Equity ETF (SCHD) delivered an even stronger performance, returning just over 30% in the same period. SCHD focuses on large, financially stable U.S. companies with a history of paying high dividends. Its holdings include Abbott Laboratories, Amgen, Merck, Coca-Cola, and Home Depot. The fund's 30-day SEC yield stands at 3.2%, and its expense ratio is just 0.06%.
For investors seeking international diversification, the Vanguard International High Dividend Yield ETF (VYMI) returned nearly 35% over the past year. VYMI holds more than 1,500 stocks from developed and emerging markets, including Canadian, Japanese, and U.K. banks, Swiss pharmaceutical firms like Novartis, consumer goods giant Nestlé, and energy major Shell PLC. The fund's trailing 12-month dividend yield is 3.5%, with an expense ratio of 0.07%.
Comparing Sports Assets and Stock ETFs
While the Lakers' sale return is eye-catching, it's important to recognize that such opportunities are rare and illiquid. Most people cannot buy or sell a stake in a professional sports team, and even for those who can, the risks and complexities are substantial. In contrast, ETFs offer daily liquidity, broad diversification, and low minimum investment requirements. Investors can buy or sell shares on public exchanges, making it far easier to adjust their portfolios as market conditions change.
Stock ETFs also provide transparency around fees, holdings, and performance. Unlike owning a sports franchise, which involves operational risks, regulatory scrutiny, and unpredictable revenue streams, ETFs are regulated investment vehicles with clear reporting standards. For most investors, this structure offers a more practical way to pursue long-term growth and income.
Recent market data underscores the appeal of diversified stock funds. According to Morningstar, U.S. equity ETFs attracted more than $500 billion in net inflows during 2023, reflecting growing demand for low-cost, diversified investment options. The Nasdaq-100 index, tracked by QQQM, rose 26% in the 12 months ending May 2024, while the S&P 500 gained 21% over the same period. Dividend-focused and international ETFs also saw strong inflows as investors sought both yield and global exposure.
Risks and Practical Considerations
Despite their strong recent performance, stock ETFs are not risk-free. Market volatility, sector concentration, and currency fluctuations can all affect returns, especially for funds with heavy exposure to technology or international markets. Expense ratios, while generally low, still reduce net returns over time. Investors should also consider their own risk tolerance, investment horizon, and need for income when selecting funds.
For those interested in the broader context of ETF performance amid shifting global policy, recent analysis of international ETF trends and U.S. trade policy highlights how macroeconomic events can influence fund returns and investor behavior. As always, past performance does not guarantee future results, and diversification does not eliminate the risk of loss.
ETFs have become a cornerstone of many U.S. investors' portfolios because they combine diversification, liquidity, and transparency. Unlike individual stocks, which can be volatile and require ongoing research, ETFs spread risk across many companies and sectors. Investors should pay attention to the underlying index, sector exposure, and yield characteristics of each fund, as well as the total cost of ownership. Understanding these factors can help investors make informed decisions that align with their financial goals and risk tolerance.
