US economic benchmark soars to a 20-month high. 📈 Over the past decade, the index popularly used as the litmus for the American economy, the S&P 500 index, has seen an average annual return for investors of 11.2%. But this year it bucked the trend and nearly doubled that number.

There are many ways to invest in the S&P 500

Measuring the health of the US economy. 🩺 The S&P 500 tracks the performance of the top 500 largest market cap companies listed on the US share markets - companies valued at US$14.5 billion+ by market cap - and is considered an indicator of consumer spending. Traders and fund managers use the index to compare their own fund performance.

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Forbes’ list of the best performing S&P 500 ETFs on the US share markets shows that whether they adopt a strategic allocation or a tactical allocation approach can make a difference to returns. 

As at December 2023 the top seven best performers tracking the S&P 500 were:

• SPDR Portfolio S&P 500 Growth ETF (SPYG) takes a tactical approach and holds net assets of US$20.39 billion. The stock is up 26.5% YTD and 18.4% since last year.
• SPDR S&P 500 ETF Trust (SPY), which has a net assets of US$436.44 billion and uses a core strategic allocation. SPY is up 21.1% YTD and 15.6% over one year.
• iShares Core S&P 500 ETF (IVV) adopts a core strategic allocation and holds net assets of US$378.41 billion. It’s up 21.2% YTD and 15.7% since December last year.
• Vanguard 500 Index Fund (VOO) uses the core approach and has net assets of US$936.47 billion. Like others in the top eight performers, its YTD has climbed 21.1% and is up 16.6% in one year.
• SPDR Portfolio S&P 500 ETF (SPLG) takes a core approach and has net assets totalling US$23.2 billion. Its stock is up 20.3% YTD and 15.7% since last year.
• Vanguard S&P 500 Value Index Fund ETF (VOOV) uses tactical investing and has net assets of US$3.98 billion. Its stock has lifted 15.5% YTD and 12.5% in a year.
• Invesco S&P 500 Equal Weight ETF (RSP) takes a tactical approach and holds net assets of US$42.53 billion. YTD, its stock is up 7.5% and 3.8% over one year.

Which shares drove up the index? According to Bankrate, this year’s 10 best-performing stocks in the S&P 500 at end of November 2023 were:

• NVIDIA (NVDA) has soared 226.4% year-to-date (YTD) since 2 January 2023
• Meta (META) climbed 161% YTD
• Royal Caribbean Cruises (RCL) is up 146.5% YTD
• Tesla (TSLA) increased 121.4% YTD
• Carnival Corporation (CCL) is up 120.2% YTD
• Palo Alto Networks (PANW) has grown 115.6% YTD
• Advanced Micro Devices (AMD) has risen 109.9% YTD
• PulteGroup (PHM) up 108% YTD
• Salesforce (CRM) lifted 87.6% YTD
• General Electric (GE) has lifted 80.8% YTD

AI announcements rally the S&P 500

Last week the S&P 500 jumped nearly a whole percentage point. 🤾  Nvidia (NVDA) stocks have soared nearly 232% in 2023 thanks to the chipmaker’s AI play, and last Wednesday AMD (AMD) unveiled their new AI enhancing products boosting the S&P’s five-day performance. The announcements included AMD’s new MI300X chip and M1300A APU (accelerated processing unit) geared to ‘train and run’ large language models (LLMs) featuring ‘better memory capacity and more energy efficient than their predecessors’. 

AMD has big name partners onboard too, including Microsoft (MSFT) with their AI-optimised Azure VM series, Meta (META), Oracle (ORCL), Dell (DELL), Arista (ANET), Cisco (CSCO) and Broadcom (AVGO). AMD also announced their new Ryzen 8040 with 1.6 times more mobile AI processing than previously available.

AMD CEO Lisa Su told CNBC the AI total addressable market they previously projected to be worth around US$150 billion by 2027, now - in part due to products like ChatGPT - they project to grow to around US$400 billion by 2027. She also said AMD has a ‘very clear line of sight to’ bring in US$2 billion in revenue in 2024. The news contributed to AMD stocks becoming last week’s most traded stock behind Tesla (TSLA) and Nvidia, with AMD last week climbing 15% after Wednesday’s launch, and up 109.9% year-to-date.

Hatch investors hatching ETFs 🪺

ETFS still thrived in 2023 on Hatch. 🐣 ETFs remained popular with Hatch investors in 2023.

The four most popular ETF stocks on Hatch. Sitting behind Hatch’s 2nd most popular stock  Vanguard 500 Index Fund (VOO), which this year has pushed past the nearly 20% average return of the S&P 500, are three ETFs that have made above-average annual returns:

• The 10th most popular stock: US Total Stock Market Index Vanguard (VTI) holds net assets of US$1.39 trillion. Its YTD stock has climbed 20.6% and over one year it’s up 15.1%
• The 13th most popular: S&P 500 Growth Vanguard (VOOG) has net assets totalling US$8.36 billion. The stock has jumped up 26.7% and over one year, is up 18.5%
• The 15th most popular: ProShares UltraPro QQQ ETF (TQQQ) holds net assets of US$18.67 billion. Its stock has climbed 171.8% YTD, and 112.3% since one year ago.

Vibecession vs goldilocks economy vs soft landing…?!

Seems no one can agree on the American economy. 🥊 Bloomberg contributor Kyla Scanlon struck writers’ gold last week when a word she coined - vibecession - officially joined the pop culture lexicon landing a spot on Dictionary.com. 

In a mid-year article on her Substack, Scanlon pondered data vs reality saying that ‘we would somehow end up with the vibes of a Recession, but maybe not the economic reality of one (yet)’. That’s all the vibes and spending behaviour of a recession, where people hold back on spending on larger, more expensive items, when in fact no economic recession exists. Some Wall Street Journal writers last week agreed, saying ‘Wall Street has been more influenced by perception than reality'.

But while the US has so far managed a ‘soft landing’, when it come to recession, the Bloomberg editorial board wrapped their year warning Biden’s government about ‘celebrating too soon’ and ‘gaslighting Americans about their economic standing (which) “only adds insult to injury,”’, they reported in Bloomberg Opinion last week, saying that Americans are hurting:

‘...groceries are up 25% since 2020; the food budget for a four-person household is up more than 30%. Housing is less affordable than it has been for years, thanks to higher rents, home prices and (especially) mortgage rates…many households don’t just feel worse off; they are worse off. Telling them the economy is in excellent shape only adds insult to injury.’

Other commentators have suggested the US is in a Goldilocks economy, where the economy is ‘not too hot or too cold but just right’. And this week, hedge fund manager and CIO of Livermore Partners David Neuhauser told CNBC that ‘somebody got it wrong’ about a US recession eventuating, but said data is conflicting and he’s ‘seeing a lot of cracks’:

‘It looks like the US is the best spot to be in, and I think that today that’s true. Except I think that [the] forward path — are we going to see things start to fall off a cliff? Or are we going to, sort of, glide path down and corporate earnings are going to be sheltered from the storm?’

‘When you look at the oil … and you look at the gold market, that’s telling you recession is in the front. But when you read the tea leaves in terms of what analysts are saying, economists are saying as far as the US economy — that the soft landing is approaching. That’s what, actually, the 10-year [Treasury yield] is telling you.”

Predicting the future is impossible, so perhaps sticking to the facts and gazing in the rearview mirror - like the Forbes’ year wrap-up - is the best we can do.

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