This 2 ETF Portfolio Historically Outperforms the S&P 500 With Less Volatility
Key PointsA simple two-factor portfolio could be all you need to outperform the S&P 500.
A simple 50/50 split between two ETFs has historically produced higher annual returns with lower volatility than the S&P 500. This strategy combines momentum stocks, which have performed well in bull markets, and quality stocks that remain stable during market downturns. Momentum stocks, tracked by the Invesco S&P 500 Momentum ETF, and quality stocks, tracked by the Invesco S&P 500 Quality ETF, have both outperformed the S&P 500 when combined in a balanced portfolio.
This approach has generated annualized returns of 14.17% compared to the S&P 500's 11.08%, with less volatility over the long run. Investors can implement this strategy with minimal expense ratios, making it an accessible option for achieving better returns with reduced risk.
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