Q: which index fund do you feel has the better chance to outperform over the next 1, 3, 5 years? Normally i would side with SPY but considering current valuations i'm wondering if XIU might be the better medium term performer
5i Research Answer:
We find it hard to not say SPY. While there are quality names in XIU, they simply do not have the same growth potential as SPY. We think the broadening out of SPY paired with rate cutting having begun in the US provides the necessary catalysts for outperformance to XIU. Further, XIU is more concentrated in financals and energy names whereas SPY has more of a tech focus which can provide significant growth leading to outperformance at any time. We think short periods of outperformance for XIU are possible, but anything over a year would surprise us.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in SPY.