Best Performing ETFs of 2024: Year in Review
2024's top ETFs were dominated by AI, semiconductors, and mega-cap growth. Here is what won, why, and whether you should chase the winners.
Don't have time? Here's what you need to know:
- 12024's winners (SMH, QQQ, Bitcoin ETFs) were driven by AI and tech — a concentrated theme
- 2Past performance does not predict future returns — chasing winners is the most common investing mistake
- 3Maintain your target allocation and rebalance; do not sell underperformers to buy more winners
- 4A diversified portfolio (VTI + VXUS + BND) works regardless of which theme dominates any given year
2024's Best Performing ETFs
2024 was another year dominated by mega-cap tech and AI. The S&P 500 gained roughly 24% — well above its historical average. Semiconductor and AI-related ETFs led the charge, powered by Nvidia's continued GPU demand and excitement around generative AI. Bitcoin ETFs also debuted and attracted massive inflows after SEC approval in January 2024.
| ETF | Category | 2024 Return (Approx) | Key Driver |
|---|---|---|---|
| SMH | Semiconductors | ~35% | Nvidia, Broadcom, TSMC on AI chip demand |
| QQQ | Nasdaq 100 | ~28% | Mega-cap tech earnings growth |
| VOO | S&P 500 | ~24% | Broad market rally led by Magnificent 7 |
| VTI | Total U.S. Market | ~23% | U.S. market broad strength |
| IBIT | Bitcoin (spot) | ~120% | First year of spot Bitcoin ETFs |
| SCHD | Dividend Growth | ~15% | Solid but trailed growth stocks |
| VXUS | International | ~5% | Strong dollar, weak China weighed on returns |
| BND | U.S. Bonds | ~2% | Rates stayed higher for longer |
What 2024's Returns Tell You (Not Much)
Last year's returns are historical data, not a forecast. The ETF that returned 35% in 2024 might return -15% in 2025. In 2022, SMH fell 35% — wiping out 2+ years of gains. Chasing last year's winners is the most common and most expensive mistake in investing. Studies show that top-performing funds in one period typically underperform in the next.
The correct response to 2024's results: check if your existing portfolio is on track, rebalance if any position has drifted more than 5% from target, and continue your automatic monthly investments. Do not sell your underperformers (VXUS, BND) to buy more of the winners (SMH, QQQ). Performance rotates.
Positioning for 2025 and Beyond
Nobody knows what 2025 will bring. International stocks (VXUS) could outperform after years of lagging. Bonds (BND) could rally if the Fed cuts rates. AI could hit a spending wall. The best strategy is the one that works regardless of which scenario unfolds: a diversified portfolio of VTI + VXUS + BND, rebalanced annually, funded monthly.
If anything, 2024's strong returns mean future expected returns from current valuations may be lower. The S&P 500 trades at elevated P/E ratios. This is not a sell signal — it is a reminder to maintain diversification and realistic expectations.
Important: Do not buy an ETF because it had a great year. Performance chasing is the most reliable way to underperform. The ETFs that topped 2024 (semiconductors, crypto) are the same ones most likely to disappoint if the trend reverses.
Ready to invest? Open an IBKR account in 10 minutes and get free stock. $0 commissions on US ETFs • Fractional shares from $1 • 150+ global markets.
Frequently Asked Questions
Should I buy more of 2024's best performing ETFs?
Not because of past performance. If semiconductors (SMH) or growth (QQQ) were already part of your target allocation, continue buying as planned. Do not increase your allocation just because they went up. Winners rotate — chasing them is how investors buy high and sell low.
Why did international stocks lag so much?
A strong U.S. dollar reduced returns for dollar-based investors. China's property crisis and weak consumer spending hurt Asian markets. European growth was sluggish. These headwinds may ease — and when they do, international stocks could outperform U.S. stocks for an extended period (as they did 2000-2009).
Do bonds still make sense after low 2024 returns?
Yes. Bonds currently yield 4-5%, which provides real income. Their role is stability — when the next stock market crash happens (and it will), bonds cushion the blow. Low bond returns in one year do not change the diversification math over 20+ years.
Further Reading
Free Tools
Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.