Hundreds of exchange-traded funds (ETFs) launched in the last year alone, crowding an already-dense field and making it harder for investors to pinpoint the best options for their portfolios.
Many ETF investors favor a long-term strategy—a sensible approach, given the automatic diversification and reduced oversight compared to individual stocks. Still, the start of a new year is a perfect time to reassess and identify standout funds poised for growth in 2026.
1. Widely Diversified Small-Cap Fund Could Get a Boost From Rate Cuts
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A long-standing ETF with over 25 years of history, this fund is among the oldest currently available.
This ETF’s enduring appeal lies in its broad and affordable exposure to the small-cap space, holding more than 600 U.S.-based small companies. The portfolio is diversified across sectors, with financials, industrials, and information technology leading the way.
Small-cap stocks often boast significant growth potential compared to larger companies, but also carry substantial risk.
A large basket of hundreds of small-caps helps mitigate this risk while still offering exposure to potentially explosive growth stories.
Heading into 2026, and following three interest rate cuts by the Federal Reserve, small-cap stocks are likely to benefit from lower borrowing costs. This could stimulate growth and provide the catalyst these companies need to succeed. The fact that IJR has returned almost 6% in the last month alone could signal further potential in the new year.
2. Space Stock Gains Translate to Big Boosts for a Niche Industry Fund
A more narrowly focused fund (with a higher annual fee of 0.75%), this one holds just under 50 stocks of companies operating in—or reliant on—the space industry.
The list includes spacecraft and satellite manufacturers, as well as companies in imagery, intelligence, telecommunications, and defense, among others.
Despite its niche focus and relatively small asset base of just $125 million, UFO has soared in the last year thanks to prominent government contracts, lower launch costs, and a surge in commercial applications for satellite technology.
As a result, UFO has surged by 12% in just a month and more than 61% year-to-date (YTD).
If space stocks continue to outperform, UFO is well-positioned to benefit in 2026.
3. Lithium Stock Returns Could Fuel Continued Rally for LITP
This fund is prepared to capitalize on a continued recovery in the metal industry, driven by growing demand for electric vehicles and energy storage. This is evidenced by the fund’s nearly 8% gain in the last month, capping off an outstanding 79% return YTD.
LITP is a highly concentrated fund, targeting around 30 names in the international lithium industry. A small number of positions represent a significant portion of the portfolio, so investors should note this isn’t a broadly diversified basket of stocks.
At 0.65% per year, this fund is relatively expensive, and both assets and trading volume are fairly low, potentially impacting liquidity. Nonetheless, LITP has tapped into an industry with incredible growth potential, and the timing may be right in the new year to continue its impressive rally.
4. Actively Managed Options Strategy With a Unique Approach
The Opportunistic Trader ETF stands out for several reasons. Launched in June 2025, it’s the newest fund on this list. It’s also actively traded and more expensive, with an annual fee of 1.07%.
WZRD takes an interesting approach, utilizing varied options strategies to ensure low correlation to the S&P. For investors cautious about the overall market in the coming year, WZRD might be an effective hedge.
Though WZRD has a limited trading history, its roughly 2.5% return in the last month topped the market. Investors willing to take a chance on a new and bold ETF in 2026 may be rewarded with further appreciation.
