Top-Performing ETFs Leading Early 2026 Market Surge

The opening months of 2026 have unveiled a distinct market landscape where specific sectors and asset classes are delivering outsized gains for investors. While broader indices have posted solid returns—with the S&P 500 climbing 1.4%, the Dow Jones advancing 2.7%, and the Nasdaq Composite rising 1.2% through mid-January—the most compelling investment opportunities have emerged within best performing ETFs that align with powerful underlying market drivers. These gains reflect a convergence of geopolitical shifts, policy expectations, and structural market trends that are reshaping portfolio dynamics.

Geopolitical Tensions Drive Defense Stock Outperformance

Rising international tensions have catalyzed a significant rally in defense-oriented equities and their corresponding exchange-traded funds. The sector received particular momentum following early-January geopolitical developments involving Venezuela, building on momentum established throughout the prior year as defense spending accelerated worldwide. This combination has positioned defense-focused ETFs among the year’s strongest performers.

The iShares US Aerospace & Defense ETF (ITA) exemplifies this trend, posting a 9.8% gain in the opening weeks of 2026. This fund provides exposure to companies engaged in aerospace and defense manufacturing, capturing the structural tailwinds from elevated global military spending. For investors seeking exposure to this secular trend, best performing ETFs in the defense space offer a concentrated way to benefit from geopolitical risk premiums.

Japanese Market Strength and Policy-Driven Rally

Japan’s equities have surged to record heights, driven by shifting political expectations and anticipatory fiscal policy measures. Prime Minister Sanae Takaichi’s elevated approval ratings have sparked speculation about potential snap elections, with market participants positioning for pro-growth economic policies, including enhanced defense allocations and targeted tax reductions.

Bond market dynamics have also shifted materially, with Japan’s 40-year government bond yield reaching unprecedented levels in late January amid broad debt market repricing. Investor concerns about proposed food sales tax reductions and their fiscal implications have contributed to this yield volatility. Against this backdrop of policy optimism, the iShares MSCI Japan ETF (EWJ) has delivered a 5.1% return year-to-date, providing a convenient vehicle for capturing Japanese equity momentum.

Gold’s Safe-Haven Resurgence

Precious metals have reasserted their traditional safe-haven characteristics as investors navigate elevated uncertainty. Gold bullion prices reached record levels in January, driven by international political tensions and regional instability, alongside Federal Reserve rate-cut expectations that support lower real yields. Central bank accumulation has further underpinned gold’s fundamentals, creating a sustained bull case for the precious metal.

The SPDR Gold Trust (GLD), one of the most accessible best performing ETFs for precious metals exposure, has gained 5.8% year-to-date. This performance reflects both the tactical flight-to-safety behavior and structural support from monetary policy expectations. Investors utilizing gold ETFs benefit from simplified exposure compared to physical bullion ownership while capturing full participation in price appreciation.

Semiconductors and U.S.-Taiwan Trade Architecture

A transformative development emerged on January 15 with finalization of a comprehensive trade framework between the United States and Taiwan focused on semiconductor manufacturing. The agreement stipulates that Taiwanese semiconductor producers will commit at least $250 billion in U.S. production capacity investments, while Taiwan’s government provides $250 billion in credit support for supply-chain partners relocating stateside. This landmark accord reshapes technology supply chains and creates substantial long-term implications for semiconductor companies and related equity holdings.

Emerging Winners Among Best Performing ETFs

Several exchange-traded funds have posted exceptional returns by capturing specific subsectors and thematic trends emerging throughout early 2026:

CoinShares Bitcoin Mining ETF (WGMI) – Up 33.4% year-to-date. Bitcoin prices have appreciated approximately 4% in the period, supported by Federal Reserve monetary accommodation and a mixed employment landscape that sustains expectations for prolonged cheap money conditions. Institutional capital flows and sentiment surrounding the current administration’s pro-cryptocurrency stance have amplified demand for digital asset exposure, with Bitcoin reserve discussions further catalyzing institutional engagement.

REX Drone ETF (DRNZ) – Up 33.1% year-to-date. This fund tracks an index measuring companies engaged in unmanned aerial vehicle manufacturing and enabling infrastructure. The underlying portfolio captures broad exposure to drone and robotics innovation. With a 65 basis point annual fee, the fund has benefited substantially from the defense sector rally extending to specialized hardware manufacturers.

Roundhill Meme Stock ETF (MEME) – Up 31.9% year-to-date. This fund targets companies characterized by retail investor enthusiasm and rapid sentiment shifts. Such positioning captures a distinctive market microstructure phenomenon where crowded retail participation can generate substantial price volatility, operating at a 69 basis point annual cost.

YieldMax MRNA Option Income Strategy ETF (MRNY) – Up 30.8% year-to-date. The underlying Moderna Inc. (MRNA) has appreciated 35.6% year-to-date following management’s upward revenue revision issued in November. The company narrowed its full-year guidance to a $1.6-$2.0 billion revenue range, up from the previous $1.5-$2.2 billion projection. MRNY pursues an actively managed strategy writing call options on MRNA shares to generate monthly income, currently yielding 99.78% annualized. The fund operates at a 99 basis point annual fee.

Global X Blockchain ETF (BKCH) – Up 29.8% year-to-date. Blockchain infrastructure and mining equities have experienced pronounced recovery driven by institutional capital allocation and rate-cut expectations supporting risk assets. Bitcoin price appreciation has reinforced momentum within the sector, establishing favorable conditions for blockchain-focused funds.

Strategic Implications for Portfolio Construction

The emergence of best performing ETFs across diverse themes—from defense and precious metals to semiconductors and digital assets—reflects a market environment where specific drivers are concentrating returns. Investors evaluating portfolio positioning should consider their risk tolerance and return objectives when considering concentration in thematic ETFs. The divergence between broad market indices and top-performing subsectors underscores the importance of tactical positioning while maintaining appropriate diversification.