History Says This Low-Cost Investment Could Outperform Anthropic -- and You Might Already Own It

Exciting new initial public offerings (IPO) always catch investor attention, and Anthropic could be the biggest of them all. After Space Exploration Technologies' record-shattering IPO in June, which raised $86.7 billion, Anthropic is targeting a $100 billion raise as it prepares to go public. According to reports, it could happen in November.

However, hyped-up IPOs don't have an amazing track record. While some, like Visa and Meta Platforms, have become powerhouses, others you may never have heard of or have since delisted. Lineage, for example, was the largest IPO of 2024 but is down 53% since it went public. Infineon was the world's largest tech IPO when it went public in 2000, and it delisted from the New York Stock Exchange in 2010. Today, it looks impossible that Anthropic could disappear, but the future is unknowable.

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As exciting as high-profile IPOs like Anthropic are, you don't need them to succeed as an investor. In fact, you might already own this low-cost investment that, historically, could outperform Anthropic.

IPOs don't necessarily beat the market

The investment I'm talking about, of course, is an S&P 500 index fund. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is the largest exchange-traded fund in the world, with $1.8 trillion in assets, and it has the lowest expense ratio of similar ETFs at only 0.03%.

Investing in the market through an index fund tracking the S&P 500 could help you outperform Anthropic over time. S&P 500 ETFs have outperformed many high-octane IPOs, including the two listed above. As of now, the index is also outperforming the SpaceX IPO.

Data by YCharts.

You might eventually own Anthropic anyway

Regulations will keep Anthropic out of the S&P 500 for some time, but the index owns all of the other largest companies in the world. If Anthropic eventually makes it into the S&P 500, VOO investors will own it, too.

Investing in an S&P 500 ETF gives you exposure to all of the largest companies in the world, and many of the best growth stocks, while reducing your risk. While it's heavily weighted toward large artificial intelligence (AI) stocks today, its makeup shifts as the market evolves. If companies like Anthropic, or stocks already in the index, like Nvidia and Amazon, are eventually replaced by new technology, that will be reflected in the index.

That's one of the reasons it's so hard to beat the market, or its proxy, the S&P 500. It has averaged 11.3% annually over the past 20 years, and $10,000 invested 20 years ago would be worth almost $85,000 today.

Data by YCharts.

So don't worry about getting your hands on Anthropic shares as it goes public. If you own an S&P 500 ETF or a well-diversified portfolio, you have a good chance of outperforming Anthropic.

Jennifer Saibil has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Nvidia, Vanguard S&P 500 ETF, and Visa. The Motley Fool has a disclosure policy.