2 Actively Managed ETFs That Crushed the S&P 500 Last Year

Despite the passive investing boom, there’s still growing demand for actively managed exchange-traded fund (ETF) solutions. Undoubtedly, passive investing in index ETFs is simple, effective, and, perhaps most importantly, keeps costs low. With many S&P 500 index ETFs in a race to zero when it comes to total expense ratios, there’s really never been a better time to take a more passive approach.

That said, passively managed ETFs aren’t all too exciting, and they don’t really tend to capture the attention of investors keen on seeking to gain an edge over the broader markets. Indeed, actively managed ETFs may face an uphill battle against their passively managed counterparts.

However, the fees on various active ETFs aren’t all too high. And with the thrill of potentially beating the stock market in any given year, I do think some active ETFs are worth keeping on the radar, especially the ones with reasonable prices of admission.

Undoubtedly, chasing past performance on stocks or funds is no way to uncover a long-term winner. When it comes to active ETFs, even the top-performing funds tend to be subject to reverting to the mean. Indeed, last year’s top performer is not guaranteed to continue the hot run in the new year.

Either way, if you find a fund with a strategy that entices you, with a fee that’s reasonable (less than 1%), adding an active ETF to your portfolio can make a lot of sense. In this piece, we’ll examine two actively managed ETFs that beat the S&P 500 last year and gauge how they stand going into this new year.

ARK Next Generation Internet ETF (ARKW)

Cathie Wood’s ARK funds really started to pick up speed last year, especially the ARK Next Generation Internet ETF (NYSEARCA:ARKW), which clocked in a nearly 50% gain last year, crushing the S&P 500, which returned just north of 20%. Undoubtedly, it’s far too soon in the game to tell if Cathie Wood is ready to outrun the S&P 500 for the next few years after taking a multi-year breather of sorts.

Indeed, it’s not hard to imagine that the theme of disruptive technologies could continue to amplify gains in the market. As artificial intelligence (AI) and various other promising emerging technologies power the tech and growth trade, Wood’s funds, I believe, could continue to benefit. Indeed, Wood has a lot to prove if we are to enter another era that sees tech stand out head and shoulders above the rest of the market. 

With Wood’s active approach and appetite for buying the dips, perhaps Wood may be able to gain the upper hand on some of the more passive tech investments out there. Either way, Wood’s next-gen internet fund, powered by last year’s gains in Bitcoin, Tesla (NASDAQ:TSLA), and Coinbase (NASDAQ:COIN), seems to have a lot of momentum at its back.

It will be interesting to see if ARKW can pull off another S&P 500-beating year. If the crypto trade stays hot and Wood can make smart trades, one has to imagine the odds will favor the ARKW. Unless you believe in Wood and are fine with volatility, the ARKW may be a tough hold in 2025.

ARK Autonomous Technology & Robotics ETF (ARKQ)

In my opinion, the ARK Autonomous Technology & Robotics ETF (ARKQ) stands out as one of the most exciting parts of the ARK basket, given the rise of autonomous robotaxis, physical artificial intelligence (AI), and increased automation in the workplace. If anything, the ARKQ is the most ready for the next chapter in the AI story.

As you’d expected, Cathie Wood’s favorite Tesla is a top holding in the ETF, contributing more than 15% of the portfolio. The huge TSLA exposure is part of the reason why ARKQ beat the S&P 500 by a wide margin, soaring just shy of 40% in 2024. If 2025 is the year of robots, ARKQ is well-positioned to continue gaining. As to whether a run for new all-time highs is in the cards remains the big question.

Either way, if there’s an ARK fund I had to bet on, it’d have to be the ARKQ. Though I’m not fully convinced that Cathie Wood is back, I do think that another year of market-beating gains could really turn heads again, as they did back in late 2020 and early 2021. Could 2025 be the year active ETFs make a comeback? We’ll have to wait and see how new AI-driven innovations pan out.