Broad U.S. large-cap funds kept pace with the S&P 500 this year. The top 50 did not.
A fund that holds only the 50 largest stocks returned 8.3% through October 15, 5.8 percentage points behind an S&P 500 fund, and the gap opened in the first half.
Key takeaways
Invesco S&P 500 Top 50 ETF XLG returned 8.3% this year through Thursday, October 15, 2026, including dividends. That was 5.8 percentage points behind State Street SPDR S&P 500 ETF SPY, which returned 14.1%.
XLG is one of 29 funds in the U.S. large-cap category. The median return of those 29 this year was 13.8%. SPY is an S&P 500 fund, and it is not in the category.
Three broad funds among the 29 hold $200 billion of the category's $241 billion. Vanguard Morningstar Large-Cap ETF VV returned 14.0% this year. Schwab U.S. Large-Cap ETF SCHX returned 13.7%. iShares Russell 1000 ETF IWB returned 13.6%.
VV tracks the Morningstar U.S. Large Cap Index, formerly the CRSP US Large Cap Index. SCHX tracks the Dow Jones U.S. Large-Cap Total Stock Market Index. IWB tracks the Russell 1000 Index, which includes mid-cap stocks as well as large ones. Those differences did not separate the three this year.
The gap opened in the first half
XLG tracks the S&P 500 Top 50 Index, the 50 largest companies in the S&P 500, and holds $11.9 billion. Technology is 51% of the fund, and Nvidia alone is 12.6%.
The shortfall was in place before the third quarter. In price, XLG fell 8.0% in the first quarter and SPY fell 4.6%. In the second quarter XLG rose 12.2%, short of SPY's 14.8%.
XLG trailed SPY in both of the first two quarters
- XLG
- SPY
- Q1
- XLG −8.0%
- SPY −4.6%
- Q2
- XLG +12.2%
- SPY +14.8%
By June 30, in price, XLG was up 3.3% for the year and SPY was up 9.5%.
Including dividends, the third quarter went the other way. XLG returned 4.0% and SPY returned 2.4%. That was not enough to close the gap.
Leaving the seven biggest names out matched the S&P 500
Defiance Large Cap ex-Magnificent Seven ETF XMAG tracks the BITA US 500 ex-Magnificent 7 Index. It leaves out Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla, the seven companies Defiance calls the Magnificent Seven. Technology is still 28% of the fund, and its largest holding is Broadcom.
XMAG returned 14.1% this year, including dividends, the same figure as SPY.
Five funds clustered near 14%; XLG did not
In the third quarter it lost 2.7%, while XLG returned 4.0%.
The broad funds that hold most of the category's money kept pace with SPY. So did XMAG. XLG did not, and its better third quarter did not close the gap the first half opened.
ETFs in this story
Frequently asked questions
How far behind the S&P 500 was the top 50 fund?
Invesco S&P 500 Top 50 ETF returned 8.3% through October 15, 5.8 percentage points behind State Street SPDR S&P 500 ETF, which returned 14.1%.
Which broad large-cap funds kept pace?
Vanguard Morningstar Large-Cap ETF returned 14.0%, Schwab U.S. Large-Cap ETF returned 13.7%, and iShares Russell 1000 ETF returned 13.6%, and those three hold $200 billion of the category's $241 billion.
When did the top-50 fund fall behind?
The shortfall was in place before the third quarter, and by June 30, in price, Invesco S&P 500 Top 50 ETF was up 3.3% for the year while State Street SPDR S&P 500 ETF was up 9.5%.
How did a fund that left out the Magnificent Seven do?
Defiance Large Cap ex-Magnificent Seven ETF returned 14.1% this year, including dividends, the same figure as State Street SPDR S&P 500 ETF.
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