Potential Gains in 2025 for ETF Investors
If you’re invested in exchange-traded funds, the year 2025 could have been quite profitable. The S&P 500, which is tracked by the three largest ETFs, reportedly returned around 16% that year, based on data from the ETF database.
However, depending on which funds you held, there might have been opportunities to earn even more.
For instance, the Microsectors Gold Miners 3X Leveraged ETN, which follows privacy-focused cryptocurrencies, ended the year with an astonishing rise of 796%, according to FactSet data reviewed by CNBC. This was the top-performing ETF in the U.S. market. If you had dabbled in other ETFs targeting metal mining or Korean markets, the profits could have been significant.
Proceed with Caution
Jeff Ptak, managing director at Morningstar Research Services, emphasizes that while it’s tempting to dream about what returns would have looked like if you’d chosen last year’s winners, it’s crucial to reconsider before making such picks a core part of your investment plan.
“They should play a minimal role, if any, in your portfolio,” he argues. “Most of the frontrunners in these lists are niche, highly volatile, and, honestly, a bit quirky. Those aren’t terms I associate with prudent long-term investing.”
Watch Out for the Winners
Experts suggest that building wealth requires a focus on smart, long-term strategies. So, why might some of the 2025 winners be inappropriate for long-term investment?
Leveraged Funds
A common factor among many of the top performers is the use of leverage, which involves trading derivatives to boost a fund’s returns. Funds sporting labels like 2X or 3X don’t merely follow an index but attempt to achieve multiples of its returns. This strategy tends to make these investments extremely volatile and likely candidates for both the best and worst lists by year-end, as noted by Roxana Islam, head of sector and industry research at TMX VettaFi.
“It’s not surprising to see leverage at the top,” she mentions. “In just a few months, they might make a splash.”
For long-term investors, the issue with these funds is that they reset daily and target returns of 200% to 300% of their benchmark each day. This means they are more suited for day traders rather than true investors, as Islam puts it.
“These are really just short-term trading tools. They’re intended to be held for a day,” she explains. “Even if there’s a spike, it’s unlikely to hold up over a year.”
Market Volatility
Another common thread among the successful ETFs last year relates to precious metals mining funds.
It’s not surprising that some mining companies experienced strong performances, considering gold prices surged about 65% in 2025, and silver saw an increase of more than 140%. Many of these firms have well-established operations and are reaping the benefits of rising commodity prices.
While holding precious metals can be a sound strategy for diversifying a portfolio or hedging against inflation, investing in mining firms presents a different set of challenges, according to Ptak.
Stock prices for these companies are influenced not just by metal prices but also by fluctuations in their business health, which can be quite unstable and burdened with debt. “Mining ETFs are a bit less speculative than those labeled with 2X or 3X,” he notes.
Making Smarter Investment Choices
In general, when considering adding a high-performing fund to your portfolio, Islam advises that it’s essential to look at its long-term performance as well as how it aligns with your overall investment strategy. Consulting a financial advisor could be beneficial in this process.
As you look at your year-end performance, aim for consistent, long-term gains rather than quick wins, Islam suggests. “Past results don’t necessarily predict future outcomes, especially with many of these smaller niche ETFs,” she points out. “They often don’t keep pace year over year compared to broad market ETFs.”
