Be careful buying the top 10 ETFs of 2025: They have 'very little, if any' role in your portfolio, says expert

If your portfolio is invested successful exchange-traded funds, you whitethorn person had a precise bully 2025. The S&P 500 — the scale tracked by the 3 largest ETFs connected the market, per ETF Database – returned astir 16% successful 2025.

But successful theory, depending connected which funds you held, you could person done rather a spot better.

The MicroSectors Gold Miners 3X Leveraged ETN, a money which tracks the terms of a privacy-focused cryptocurrency, finished the twelvemonth up 796% — the champion of immoderate U.S. traded ETF, according to information from FactSet analyzed by CNBC. You could person besides earned a immense instrumentality had you bought different ETFs focused connected metallic mining oregon Korean stocks.

While it tin beryllium amusive to fantasize astir what your returns could person looked similar had you chosen 1 of past year's large winners, you should deliberation doubly earlier choosing 1 arsenic a large gathering artifact of your investing strategy, says Jeff Ptak, managing manager for Morningstar Research Services.

"They should play precise little, if any, relation successful your portfolio," helium says. "Most of what you spot astatine the apical of these lists is niche, hyper-volatile, gimmicky. These aren't words I would subordinate with prudent, semipermanent investing."

Prudent, semipermanent investing is mostly the sanction of the crippled if you're hoping to physique wealth, investing experts say. So what makes immoderate of the 2025 winners unsuitable?

Leveraged funds

One communal taxable connected the database is the usage of leverage, the signifier of buying oregon selling derivatives to amplify a fund's return. Rather than seeking to way the instrumentality of an index, funds with 2X oregon 3X successful the sanction purpose to present multiples of that aforesaid return. This makes them highly volatile, and apt candidates for year-end best-of — oregon worst-of — lists, says Roxanna Islam, caput of assemblage and manufacture probe astatine TMX VettaFi, an concern probe steadfast and scale provider.

"I don't deliberation it's astonishing to spot leverage astatine the top," she says. "With 2 oregon 3 times [returns] they're astir apt going to beryllium successful the apical astatine immoderate point."

The occupation with these funds, for semipermanent investors, is that they purpose to nutrient 200% to 300% of the index's instrumentality connected a regular basis, resetting for each trading day. In different words, they're for day traders, not investors, says Islam.

"These are fundamentally utilized arsenic short-term trading instruments. They're intended to beryllium held for 1 day," she says. "They're not thing to clasp for a full year, adjacent though you spot a precocious [2025] return."

Volatile areas of the market

Another communal taxable among winning 2025 ETFs: precious metals mining funds.

It's nary astonishment that immoderate companies that excavation for the shiny worldly did good past year. Gold prices spiked by astir 65% successful 2025 and silver roseate by much than 140%. These firms, immoderate of which person much well-established mining operations than others, payment from rising precious metals prices.

While owning precious metals — often arsenic a portfolio diversifier oregon an ostentation hedge — is simply a communal concern strategy, says Ptak, investing successful miners is "a full different kettle of fish."

That's because, successful summation to fluctuations successful metallic prices, these firms' banal prices determination based connected changes to the underlying business, which tin beryllium volatile and highly indebted, says Ptak.

"[Mining ETFs] are lone somewhat little speculative than thing that's got 2X oregon 3X successful the name," helium says.

Overall, erstwhile considering adding immoderate high-performing money to your portfolio, you'd beryllium omniscient to see its semipermanent way grounds arsenic good arsenic however its objectives acceptable wrong your concern strategy, says Islam. It whitethorn beryllium omniscient to bash this with the assistance of a fiscal professional.

And erstwhile browsing year-end lists, retrieve that you're looking for consistent, semipermanent returns alternatively than short-term wins, says Islam.

"Past show does not adjacent aboriginal performance, particularly erstwhile you're looking astatine a batch of these smaller themes, smaller ETFs," she says. "A batch of them don't thin to amusement important outperformance twelvemonth aft year, the aforesaid mode holding a wide banal marketplace ETF would."

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