Top 10 ETFs of 2025 have ‘very little, if any’ role in your portfolio, says expert
If your portfolio is invested in exchange-traded funds, you may have a very good 2025. The S&P 500, the index tracked by the market’s three largest ETFs, returned about 16% in 2025, according to the ETF Database.
But in theory, you could do much better, depending on the funds at your disposal.
MicroSectors Gold Miners 3X Leveraged ETN, a fund that tracks the price of a privacy-focused cryptocurrency, finished the year up 796%, according to FactSet data analyzed by CNBC; The best among all U.S.-traded ETFs. You could also have made a big return if you had purchased other ETFs focused on metal mining or Korean stocks.
While it’s fun to imagine what your returns might have looked like if you had picked one of last year’s biggest winners, you should think twice before choosing one as a key building block of your investment strategy, says Jeff Ptak, managing director of Morningstar Research Services.
“They should play very little role in your portfolio,” he says. “A lot of what you see at the top of these lists is niche, extremely volatile, and fraudulent. These are not words I would associate with prudent, long-term investing.”
Watch out for big winners
Investment experts generally say that prudent, long-term investing is the name of the game if you hope to build wealth. So what makes some of the 2025 winners ineligible?
leveraged funds
One common theme in the list is the use of leverage, the practice of buying or selling derivatives to increase a fund’s return. Funds with 2X or 3X in their names aim to provide multiples of the same return rather than tracking the return of an index. That makes them highly volatile and likely candidates for year-end best or worst lists, says Roxanna Islam, head of sector and industry research at TMX VettaFi, an investment research firm and index provider.
“I don’t think it’s surprising to see leverage at the top,” he says. “Two or three times [returns] “They’ll probably be at the top at some point.”
The problem with these funds for long-term investors is that they aim to produce 200% to 300% of the index on a daily basis, resetting for each trading day. In other words, for them Islam says there are day traders, not investors.
“These are primarily used as short-term trading tools. They are intended to be held for a day,” he says. “Even if you see a high spike, these are not something that will hold for a year. [2025] return.”
Variable areas of the market
Another common theme of 2025 winning ETFs is precious metal mining funds.
It’s no surprise that some companies mining for shiny things performed well last year. Gold prices will increase by nearly 65 percent in 2025, while silver prices will increase by more than 140 percent. These companies, some of which have more established mining operations than others, benefit from increasing precious metal prices.
Owning precious metals is a common investment strategy (mostly for portfolio diversification or inflation protection), but investing in miners is “another matter,” says Ptak.
That’s because, in addition to fluctuations in metal prices, these companies’ stock prices move based on changes in their underlying businesses, which can be volatile and highly indebted, Ptak says.
“[Mining ETFs] “It’s only slightly less speculative than something with 2X or 3X in its name,” he says.
Make smarter moves
In general, when considering adding any high-performing fund to your portfolio, Islam says it would be wise to consider its long-term track record as well as how well its objectives fit into your investment strategy. It may be wise to do this with the help of a financial professional.
When browsing year-end listings, remember that you’re looking for consistent, long-term returns rather than short-term gains, says Islam.
“Past performance does not equal future performance, especially when you look at these smaller themes, smaller ETFs,” he says. “Many of them do not tend to show significant year-to-year outperformance, as indicated by owning a broad stock market ETF.”
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