The Best ETFs for 2025: An Overview of Returns in Key Sectors
As a stable and well-covered system of diversification, ETFs have been a go-to choice for many investors and hedge funds.
Recently they’ve gained even more traction thanks to their stable results during a volatile and relatively unstable economic environment.
ETFs provide a cost-effective and flexible way for investors to reach a wide range of asset classes including stocks and bonds, niche markets like crypto, renewable energy, etc.
In this article we’ve explored the best ETFs for 2025, why they’re a great investment choice for all levels of investor and how you can get started.
What makes ETFs a Smart Investment Decision
Exchange traded funds combine the diversification aspect of mutual funds with the easy tradability of stocks.
By purchasing shares of an ETF, you’re practically investing in an aggregate of securities, which can be a combination of stocks, bonds, commodities, or other assets.
This inherent diversification directly minimizes risk compared to investing in individual stocks.
ETFs also often have much lower expense ratios when compared to traditional mutual funds, making them a cost-effective alternative.
ETFs provide stability in periods of fluctuating interest rates and uncertainty, offering reliable long-term growth regardless of market conditions.
With a wide variety of ETFs to choose from, investors can enhance their portfolios and hone in on particular areas of interest while sticking to a highly diversified investing model.
Thanks to ETFs investors can safely pursue specific goals, whether they are maximizing dividend yields, long-term growth or catching emerging trends like clean energy or crypto.
ETF Categories and What They Cover
Investors have many ETFs to choose from depending on their area of focus. Some of the most popular types include:
Index ETFs: These types of ETFs track specific indexes, such as the S&P 500 or Nasdaq 100. They provide investors with a straightforward way to gain exposure to a large segment of the stock market.
Dividend ETFs: For investors seeking regular income, dividend-focused ETFs group companies with a strong track record of paying dividends. These types of funds are quite appealing for retirees or investors who are looking to supplement their regular income.
Tech ETFs: For those looking to invest in the future and pick up on new trends, tech ETFs are a good option. These funds focus mostly on developing sectors such as software, semiconductors and AI.
Bitcoin ETFs: As the cryptocurrency markets continue to develop and become increasingly more mainstream, Bitcoin ETFs have become, as of late, a safe way to diversify your investment while getting a piece of the crypto hype.
Energy ETFs: Diversification and safe investing into energy and renewable energy is made possible through exchange traded funds that focus on this sector. These ETFs appeal to investors looking to enter these markets and gain exposure to the future of energy markets.
Bond ETFs: Investors looking for the safest exchange traded funds usually opt for Bond ETFs which provide exposure to fixed-income securities and can balance a portfolio during highly volatile periods.
Each type of ETF caters to different investment goals. Investors can use these ETFs to fine-tune their portfolios and trading strategies by aligning their goals with the sectors and industries provided by these funds.
Top ETFs of 2025
Below, we’ve provided a list of the 20 most attractive ETFs currently on the market which encompass various asset classes and sectors. We’ve included information on their five-year annualized returns, expense ratios and potential dividend yields.
Data as of December 9, 2024. Past performance is not indicative of future results. Dividend yields and expense ratios are subject to change.
How to Get Started with ETF Investing
Investing into an ETF is done simply through an online brokerage account, which grants you access to the stock market and enables the purchasing of shares on your behalf.
Most online brokers offer commission-free trading and it’s never been so easy to invest as it is now.
If you’re looking for the right online broker for you, have a look at our extensive overview of the best online brokerage accounts available on the market today.
Once you’ve linked up with a broker and set up your account, you’ll need to consider a few important points before purchasing ETF shares:
- What are Your Investment Goals? Trying to save for retirement? Wish to generate additional income, or perhaps short-term growth? These questions directly affect your potential trading strategy and the choice of ETF best suited to it.
- How is the ETF Performing? Does the ETF you’ve chosen to research show positive key metrics such as expense ratios, dividend yields and overall historical performance. ETFs with a lower expense ratio require that more of your money stays invested, while those with a higher dividend yield can supplement your income with regular dividend payouts.
- How Can You Diversify? Is a given ETF the right call in terms of diversification? Does it broaden your existing investments or is it highly diversified on its own in terms of the stocks it offers as part of its index. It’s best to consider investing in multiple ETFs for the greatest diversification possible across the entire market.
- Consider Tax Implications. Compared to mutual funds, ETFs tend to be generally more tax-efficient because they minimize capital gains distributions. However, you’ll still need to calculate how taxes may impact your returns.
- Consider Scaling Slowly. If you’re just getting into investing, try to invest small amounts to get a feel for the market and particular ETF types before scaling.
What makes ETFs so Well-Suited for Long-Term Investors?
Most ETFs are well-suited to weather the storms of volatile market conditions, which have become quite unpredictable.
Their highly diversified nature and cost efficiency makes ETFs one of the best long-term investment mechanisms created.
By investing into an exchange traded fund, investors can minimize the impact of poor performance in an individual security, thereby automatically reducing their overall portfolio volatility.
Another important factor is the low expense ratios of ETFs. Over a multi-year period, high fees common in traditional mutual funds can dramatically impact returns due to their compounding effect.
ETFs often have a fraction of those fees and this reduction of fund management costs can be directly reinvested into the market.
There’s also the choice of ETFs that reinvest dividends which can be a crucial wealth-builder in long-term investing.
By capitalizing on the compounding nature of this style of investing, investors can quickly harness greater capital to stabilize long-term growth without having to rely on additional mechanisms.
Market conditions pose additional challenges through fluctuating interest rates and stock market cycles.
Throughout the decades, however, ETFs have shown themselves to be extremely resilient to these phenomena and to economic uncertainty, once more as a result of their highly diversified nature.
Trends are also an area of interest to investors which ETFs adapt to flawlessly. For example, tech ETFs like Invesco QQQ Trust (QQQ) have consistently outperformed in the last decade, leveraging high-growth sectors such as artificial intelligence, cloud computing, and semiconductor technology.
Additionally, bond ETFs like iShares Core U.S. Aggregate Bond ETF (AGG) provide a defensive play for long-term portfolios.
Bonds are typically less volatile than stocks and generate steady income, which can help balance out the risk in a diversified portfolio.
For those focused on retirement planning or other long-term goals, ETFs offer a hassle-free, buy-and-hold approach.
With consistent contributions, such as through dollar-cost averaging, investors can smooth out market volatility over time.
This strategy is particularly effective for ETFs tracking broad indices like SPDR S&P 500 ETF Trust (SPY) or Vanguard Growth ETF (VUG), which are designed to capture overall market growth.
Ultimately, the consistent performance of the biggest ETFs, combined with their structural advantages, makes them an indispensable tool for long-term wealth building.
Bottom Line
Serving as an indispensable tool for building a resilient portfolio, ETFs offer exposure to a massive scope of asset classes, including stocks, bonds, emerging markets, niche sectors like Bitcoin and renewable energy, tech, defense and much more.
There truly hasn’t been a better time to invest and through ETFs investing this can be done from a strategically safe and economically sound standpoint right from the beginning.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
