Top 7 ETFs to Buy Now for H2 2025 Returns

Q: What is an ETF and how does it work?

An Exchange-Traded Fund (ETF) is an investment fund that holds a diversified "basket" of assets, such as stocks, bonds, commodities, or currencies. Unlike traditional mutual funds, ETFs trade on stock exchanges throughout the day, just like individual shares. This means their price fluctuates during market hours based on supply and demand. When you invest in an ETF, you're buying a share of this diversified basket. Most ETFs are designed to track a specific market index (e.g., the S&P 500, a technology sector index, or a global bond index). This passive management approach typically results in lower fees. The underlying mechanism involves "Authorized Participants" (APs) who create and redeem ETF shares by exchanging them for the underlying assets, helping to keep the ETF's market price in line with the value of its holdings (Net Asset Value or NAV).

Beyond the S&P 500: Top-Performing ETFs to Watch in H2 2025

Updated: July 8, 2025

The first half of 2025 has been a dynamic period on Wall Street, characterized by shifting geopolitical landscapes, evolving economic policies, and rapid technological breakthroughs. While many investors are content to see broad market indices like the S&P 500 merely in the black, a select group of tactical Exchange-Traded Funds (ETFs) has not only navigated these complex currents but has delivered exceptional returns. These funds, each with a focused investment theme, exemplify the power of targeted exposure in a volatile market.

For investors seeking to diversify their portfolios and capitalize on high-conviction trends, these ETFs present compelling opportunities. However, it's crucial to acknowledge the inherent risks of concentrated strategies; the very momentum driving their current success could reverse if underlying conditions shift.

Here are some of the best-performing ETFs that have distinguished themselves in 2025 and continue to exhibit strong potential for the remainder of the year:

ETF (Ticker)	Expense Ratio	Total Assets (Approx.)	YTD Performance (as of Jul 7, 2025)
Select STOXX Europe Aerospace & Defense ETF (EUAD)	0.50%	$1.0 billion	+71.12%
iShares MSCI Poland ETF (EPOL)	0.60%	$490 million	+56.57%
Global X Uranium ETF (URA)	0.69%	$3.7 billion	+31.46% (1-year) / ~62.5% (Q2)
Sprott Gold Miners ETF (SGDM)	0.50%	$419 million	Not directly available (NAV +0.92% Jul 7)
ARK Next Generation Internet ETF (ARKW)	0.82%	$2.1 billion	+35%+ (Approx.)
iShares MSCI South Korea ETF (EWY)	0.59%	$4.9 billion	+40.93%
YieldMax PLTR Option Income Strategy ETF (PLTY)	1.44%	$623.5 million	Significant distributions via options strategy

Note: Performance figures are approximate and subject to intraday market fluctuations. YTD performance for SGDM was not directly available as a single figure for July 7, but daily NAV changes were positive.

Deep Dive into the Top Performers:

1. Select STOXX Europe Aerospace & Defense ETF (EUAD)

Assets: $1.0 billion
Expense Ratio: 0.50%
Why it's hot: Geopolitical uncertainties, particularly the ongoing conflict in Ukraine and heightened tensions in the Middle East, alongside evolving U.S. foreign policy stances, have spurred European nations to significantly bolster their independent defense capabilities. This renewed commitment to defense spending, as evidenced by recent NATO Summit pledges and EU initiatives like the ReArm Europe plan, has created a powerful tailwind for European aerospace and defense companies. EUAD provides targeted exposure to this critical sector, including major players like Airbus SE (OTC: EADSY) and Rheinmetall AG (OTC: RNMBY). The fund has seen an impressive gain of over 71.12% in 2025 as of July 7.

2. iShares MSCI Poland ETF (EPOL)

Assets: $490 million
Expense Ratio: 0.60%
Why it's hot: Amidst a global landscape grappling with subdued growth, Poland's economy continues to demonstrate remarkable resilience. Despite a slight downward revision from the EBRD to 3.3% for 2025 GDP growth (from 3.4%), this still represents robust expansion, driven by strong domestic demand, slowing inflation, rising real household incomes, and accelerated investments (including military procurement and EU funds). As a less developed but resource-rich region with competitive labor, Poland's economic stability makes EPOL an attractive option for U.S. investors seeking easy access to this promising market. The ETF has delivered a strong +56.57% return year-to-date.

3. Global X Uranium ETF (URA)

Assets: $3.7 billion
Expense Ratio: 0.69%
Why it's hot: Nuclear power is experiencing a significant resurgence, positioned strategically as a reliable, carbon-light alternative to both fossil fuels and intermittent renewables. Regulatory easing, growing global energy demand (including from AI data centers), and concerns about energy security are driving increased interest in uranium. URA offers broad exposure to companies involved in uranium mining (like Cameco Corp. (CCJ)) and nuclear component production, with approximately 6.87% of its assets in Sprott Physical Uranium Trust Units. The ETF has returned 31.46% over the past year and saw a substantial surge of roughly 62.5% in Q2 2025, reflecting strong positive sentiment in the sector driven by a mathematical supply deficit.

4. Sprott Gold Miners ETF (SGDM)

Assets: $419 million
Expense Ratio: 0.50%
Why it's hot: Lingering geopolitical uncertainties and concerns over potential U.S. deficit expansion continue to bolster gold's appeal as a safe-haven asset and inflation hedge. While physical gold has seen significant gains, gold mining companies often provide amplified returns due to operational leverage. SGDM, which invests in gold miners such as Newmont Corp. (NEM) and Agnico Eagle Mines Ltd. (AEM), has capitalized on this trend. Analysts like Macquarie Group predict gold could reach $3,500 per ounce by Q3 2025, suggesting continued upside for miners. SGDM's NAV showed a positive daily change of +0.92% as of July 7.

5. ARK Next Generation Internet ETF (ARKW)

Assets: $2.1 billion
Expense Ratio: 0.82%
Why it's hot: Despite broader market volatility, the transformative power of artificial intelligence (AI) and the evolution of Web 3.0 continue to drive significant investment. ARKW, managed by Cathie Wood's ARK Invest, focuses on disruptive technologies and innovative companies poised to reshape the digital economy. Its holdings include names like Coinbase Global Inc. (COIN) and Robinhood Markets Inc. (HOOD), reflecting its exposure to blockchain and fintech innovations. With returns exceeding 35% so far in 2025, ARKW demonstrates the enduring potential of groundbreaking technological advancements and the "AI arms race" among tech giants.

6. iShares MSCI South Korea ETF (EWY)

Assets: $4.9 billion
Expense Ratio: 0.59%
Why it's hot: South Korea's main stock index, the KOSPI, has soared to its highest level in over three years, largely propelled by robust gains in the nation's world-leading technology firms like Samsung Electronics (OTC: SSNLF) and major auto manufacturers such as Hyundai Motor Co. (OTC: HYMTF). Continued foreign investor interest, driven by a search for alternatives to U.S. stocks amidst trade reconfigurations, and a return to political stability after a recent leadership transition, have further fueled optimism. EWY provides direct access to this dynamic Asian market, boasting a strong +40.93% return year-to-date. (Note: The Bank of Korea did cut its 2025 growth forecast to 0.8% in May, citing US tariffs and domestic politics, which could introduce some headwinds, but current equity performance remains strong.)

7. YieldMax PLTR Option Income Strategy ETF (PLTY)

Assets: $623.5 million
Expense Ratio: 1.44%
Why it's hot: For investors seeking potentially supercharged income, YieldMax's series of "option income" ETFs offers an intriguing avenue. PLTY, specifically tied to the high-flying artificial intelligence firm Palantir Technologies Inc. (PLTR), leverages a sophisticated options strategy to generate substantial distributions. This approach aims to provide significant payouts by trading options on the underlying stock. While PLTR itself has seen remarkable gains, PLTY's design appeals to those who prioritize income generation. However, it is paramount to understand that derivatives-based strategies inherently carry greater risk than direct equity investments, making PLTY highly sensitive to shifts in underlying stock sentiment.

Important Considerations for Investors:

Elevated Risk: The focused nature of these tactical ETFs means they can be more volatile and susceptible to rapid price swings than broader market funds. Their strong performance is often tied to specific, sometimes rapidly evolving, themes.
Expense Ratios: While some specialized ETFs have higher expense ratios (like PLTY), their recent performance has, for many investors, justified these costs. Always factor fees into your overall return calculations.
Market Dynamics: Global economic and political conditions are fluid. What drives performance today may not do so tomorrow. Continuous monitoring and reassessment are key.
Due Diligence: Before investing, conduct thorough research and consider your individual risk tolerance, time horizon, and financial goals. Consulting with a qualified financial advisor is always recommended.

As we move through the second half of 2025, these tactical ETFs continue to offer a compelling narrative for investors looking to gain exposure to high-growth areas and capitalize on specific market trends in an ever-changing global economy.

Frequently Asked Questions:

What is an ETF and how does it work?

An Exchange-Traded Fund (ETF) is an investment fund that holds a diversified "basket" of assets, such as stocks, bonds, commodities, or currencies. Unlike traditional mutual funds, ETFs trade on stock exchanges throughout the day, just like individual shares. This means their price fluctuates during market hours based on supply and demand.

When you invest in an ETF, you're buying a share of this diversified basket. Most ETFs are designed to track a specific market index (e.g., the S&P 500, a technology sector index, or a global bond index). This passive management approach typically results in lower fees. The underlying mechanism involves "Authorized Participants" (APs) who create and redeem ETF shares by exchanging them for the underlying assets, helping to keep the ETF's market price in line with the value of its holdings (Net Asset Value or NAV).

Is an ETF a good investment?

For many investors, ETFs are considered a very good investment due to several key advantages:

Diversification: They allow you to easily diversify your portfolio across many assets, industries, or geographies with a single investment, reducing risk compared to picking individual stocks.
Lower Costs: Passively managed ETFs generally have lower expense ratios (annual fees) than actively managed mutual funds.
Flexibility: You can buy and sell ETFs throughout the trading day, offering more liquidity and control than mutual funds.
Transparency: Most ETFs disclose their holdings daily, so you always know what you're invested in.
Accessibility: They provide an easy and often affordable way to access a wide range of markets and asset classes, from broad market indices to niche sectors like uranium or cybersecurity.

However, like all investments, ETFs carry risks, particularly specialized or leveraged ETFs. It's crucial to understand what the ETF invests in and whether it aligns with your financial goals and risk tolerance.

What is an ETF in the UK?

In the UK, an ETF functions largely the same way as it does globally. It is an investment fund that holds a collection of securities and trades on a stock exchange, such as the London Stock Exchange (LSE).

Key characteristics for UK investors include:

Trading: You buy and sell UK-listed ETFs through a share dealing account or an investment platform, with prices fluctuating throughout the trading day.
Index Tracking: Many popular UK ETFs track major indices like the FTSE 100, FTSE All-Share, or global indices like the MSCI World or S&P 500.
Tax Efficiency: ETFs can often be held within tax-efficient wrappers like a Stocks and Shares ISA or a Self-Invested Personal Pension (SIPP), shielding any capital gains or income from UK income tax and capital gains tax, subject to individual circumstances and annual allowances.
Dividend Treatment: ETFs can either be "accumulating" (Acc), where dividends are automatically reinvested into the fund, or "distributing" (Dist), where dividends are paid out to the investor.

The principles of diversification, lower costs, and flexibility apply equally to ETFs available in the UK market.

What is the number 1 ETF to buy?

There isn't a single "number 1 ETF" that is universally best for everyone, as the ideal investment depends entirely on an individual's financial goals, risk tolerance, and investment horizon. What might be suitable for a high-growth investor may not be right for someone focused on income or capital preservation.

However, based on recent performance (as of early July 2025) and analyst sentiment, some top-performing and notable ETFs include:

ARK Innovation ETF (ARKK): Has shown strong recent performance (+47.94% in Q2 2025) focusing on disruptive innovation.
Select STOXX Europe Aerospace & Defense ETF (EUAD): Delivering exceptional returns (+71.12% YTD) driven by geopolitical factors.
Global X Uranium ETF (URA): Benefiting from the renewed interest in nuclear power and uranium demand.
Vanguard Information Technology ETF (VGT): Frequently cited for its long-term outperformance over broad markets by focusing on leading tech giants.

For long-term, diversified growth, many financial advisors often recommend broad market index ETFs like those tracking the S&P 500 (e.g., VOO, IVV, SPY) due to their low cost and consistent historical returns.

Ultimately, the "best" ETF for you requires careful consideration and, ideally, consultation with a financial advisor.