If your portfolio is invested in exchange-traded funds, 2025 could have been a very good year. 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, depending on the funds you held, you could have done pretty well.
The Microsectors Gold Miners 3X Leveraged ETN, a privacy-focused fund that tracks the price of cryptocurrencies, ended the year up 796%, according to FactSet data analyzed by CNBC. This was the highest among ETFs traded in the US. If he had bought other ETFs focused on metal mining or Korean stocks, he could have made huge profits.
Jeff Ptak, managing director at Morningstar Research Services, says while it may be fun to fantasize about what your returns would have been if you had picked one of last year’s big winners, you should think twice before choosing one as a key component of your investment strategy.
“They should play very little role, if any, in your portfolio,” he says. “Most of the things at the top of these lists are niche, highly volatile, and quirky. These are not words I associate with smart long-term investing.”
Beware of the big winners
Investment experts say if you want to build wealth, smart long-term investing is the key. So why are some of the 2025 winners inappropriate?
leveraged fund
One common theme on the list is the use of leverage, the act of buying and selling derivatives to amplify a fund’s returns. Funds with 2X or 3X in their name do not track the returns of an index, but rather aim to achieve multiples of the same returns. This makes these stocks highly volatile and likely candidates for year-end best-of or worst-of lists, said Roxana Islam, head of sector and industry research at TMX VettaFi, an investment research firm and index provider.
“I don’t think it’s surprising that there’s leverage at the top,” she says. “If you make two or three (returns), there’s a good chance you’ll be at the top someday.”
For long-term investors, the problem with these funds is that they reset every trading day and aim to generate returns of 200% to 300% of the index each day. In other words, they are for day traders, not investors, Islam says.
“These are basically used as short-term trading instruments. They are meant to be held for a day,” she says. “Even if you can expect a high return (in 2025), it’s not something you can hold for one year.”
volatile areas of the market
Another common theme among the winning ETFs in 2025 is precious metals mining funds.
It’s no wonder that some companies that mine the shiny stuff did well last year. Gold prices soared about 65% in 2025, while silver rose over 140%. Some of these companies have more established mining operations than others and are benefiting from rising precious metal prices.
Holding precious metals as a portfolio diversifier or an inflation hedge is a common investment strategy, but investing in miners is “a whole different kettle of fish,” Ptak said.
That’s because, in addition to fluctuations in metal prices, the stock prices of these companies fluctuate based on changes in their underlying businesses, which can be volatile and heavily indebted, Ptak said.
“[Mining ETFs]are just a little less speculative than something with a 2x or 3x name in the name,” he says.
make smarter moves
Overall, when considering adding a high-performing fund to your portfolio, Islam says it’s wise to consider not only its long-term track record, but also how its objectives fit into your investment strategy. It may be wise to do this with the help of a financial professional.
And as you browse your year-end list, remember that you’re looking for consistent long-term gains, not short-term gains, says Islam.
“Past performance doesn’t necessarily equate to future performance, especially if you’re looking at a lot of these smaller themes and smaller ETFs,” she says. “Many of them don’t tend to outperform as much year after year as holding broad-based stock market ETFs.”
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