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If your portfolio is invested in exchange traded fundsyou may have had a very good 2025. The S&P 500 — the index tracked by the three largest ETFs on the market, according to the ETF Database — reported approximately 16% in 2025.
But in theory, depending on the funds you had, you could have done much better.
The MicroSectors Gold Miners 3X Leveraged ETN, a fund that tracks the price of a privacy-focused cryptocurrency, finished the year up 796% — the best of any U.S.-traded ETF, according to FactSet data analyzed by CNBC. You could also have gotten a huge return if you purchased other ETFs focused on metal mining or Korean stocks.
While it can be fun to fantasize about what your returns might have looked like if you had chosen one of last year’s big winners, you should think twice before choosing one as a major part of your investing strategy, says Jeff Ptak, managing director of Morningstar Research Services.
“They should play very little, if any, role in your portfolio,” he says. “Most of the things you see at the top of these lists are niche, hyper-volatile, and gimmicky. Those are not words I would associate with prudent, long-term investing.”
Beware of the big winners
According to investment experts, careful, long-term investing is generally the name of the game if you hope to build wealth. So what makes some of the 2025 winners unsuitable?
Leveraged funds
A common theme on the list is the use of leverage, the practice of buying or selling derivatives to amplify a fund’s performance. Rather than seeking to track the performance of an index, funds with 2X or 3X in their name aim to generate multiples of that same return. That makes them highly volatile and likely to be contenders for year-end best or worst lists, says Roxanna Islam, head of sector and industry research at TMX VettaFi, an investment research firm and index provider.
“I don’t think it’s surprising to see leverage at the top,” she says. “With two or three times [returns] they will most likely be at the top at some point. »
The problem with these funds, for long-term investors, is that they aim to produce 200-300% of the index return daily, reset for each trading day. In other words, they are intended day tradersnot investors, says Islam.
“They are basically used as short-term trading instruments. They are meant to be held for a day,” she explains. “It’s not something to keep for a whole year, even if you see a high level [2025] back.”
Volatile areas of the market
Another common theme among winning ETFs in 2025: precious metals mining funds.
It’s no surprise that some companies with brilliant products did well last year. Gold Price increased by around 65% in 2025 and money increased by more than 140%. These companies, some of which have more established mining operations than others, are profiting from rising precious metals prices.
While owning precious metals – often as portfolio diversifier or hedge against inflation – is a common investment strategy, Ptak says, investing in miners is “a whole different kettle of fish.”
This is because, in addition to fluctuations in metal prices, the stock prices of these companies move based on changes in the underlying businesses, which can be volatile and highly leveraged, Ptak says.
“[Mining ETFs] are only slightly less speculative than something with 2X or 3X in the name,” he says.
Make smarter moves
Overall, when considering adding a high-performing fund to your portfolio, it would be wise to consider its long-term history as well as how its objectives fit into your investment strategy, Islam says. It may be wise to do this with the help of a financial professional.
And when you’re looking through year-end lists, remember that you’re looking for consistent long-term returns rather than short-term gains, Islam says.
“Past performance does not equate to future performance, especially when you consider a lot of smaller themes and smaller ETFs,” she says. “Many of them don’t tend to show significant outperformance year after year in the same way that holding a broad stock ETF would.”
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