The Individual Investor’s Guide to the Top ETFs 2026
Learn how ETFs dominated 2025, with record asset growth, strong overall returns and continued investor preference
Understand which ETF categories excelled or struggled
See how active ETFs, fund conversions and major providers shaped the market
Exchange-traded funds (ETFs) continued to gain assets in 2025, collecting a record $1.49 trillion in net flows and lifting total assets under management (AUM) to $13.5 trillion, according to FactSet. The industry broke new ground in 2025, debuting a record 1,167 new funds.
ETFs’ combination of flexibility, efficiency, transparency and expanding product depth made them the preferred vehicle across both growth- and income-oriented strategies.
ETF returns were mostly positive in 2025. Within the equity asset class categories in the PDF and print versions of this guide, only the consumer defensive and digital assets sector categories realized losses during the year. For fixed income, all categories posted gains in 2025. In total, about 90% of all ETFs with full-year returns rose in value in 2025, a greater percentage compared to 2024.
Investors’ preference for tax efficiency is exhibited by the increase in the number of actively managed ETFs. At the end of 2025, there were 2,725 ETFs in our universe not designated as index ETFs by Morningstar, 46.3% more than at the end of 2024. The median tax-cost ratio for actively managed ETFs in existence long enough to calculate it is 0.76%.
These funds tend to be neither large nor cheap as a group. The median actively managed ETF had $57.0 million in total assets and charged an average expense ratio of 0.74%. Approximately 13,000 shares of the median actively managed ETF are traded on the average day.
Actively managed ETFs continued to expand their reach in 2025, representing $454 billion in flows, according to Morningstar. The trend of mutual funds converting to ETFs also continued, as popular strategies were replicated in ETFs. In 2025, there were 148 conversions, compared to 55 in 2024. In November, the U.S. Securities and Exchange Commission (SEC) approved Dimensional Fund Advisors (DFA) to launch ETF share classes for 13 of its existing mutual funds. The dual share class is a mechanism for mutual fund strategies to offer ETFs without having to launch a new stand-alone ETF or convert a mutual fund into an ETF.
2026 Top ETFs Guide: The 50 Best-Performing ETFs of 2025
2026 Top ETFs Guide: The 50 Worst-Performing ETFs of 2025
2026 Top ETFs Guide: The 2025 Performance of the 50 Largest ETFs
About This Year’s Guide
This year’s ETF guide makes use of the data and tools available to members on AAII.com. They include our ETF grades and category averages. Data on 4,900 U.S.-traded ETFs is updated monthly and is available online to all AAII members. The PDF and print versions of this guide provide key data on 338 individual ETFs of broad interest to U.S. investors, covering a range of asset classes, fund groups and categories. Among the information you will find are calendar-year and annualized returns based on net asset value (NAV), yield, expense ratio and portfolio turnover.
Category averages and ETF grades help you quickly assess whether a particular fund’s annualized returns are above or below those of its peers. The category averages provide a peer-based benchmark to compare a given fund against. They allow you to quickly see if a fund is more or less attractive than the other funds in the same category.
The grades range from A to F. Each of these grades is tied to a percentile rank based on how a specific ETF compares to its category peers. An ETF’s average annual return for a given period that ranks in the top quintile (best 20%) relative to its category peers will receive a grade of A. Lower grades are assigned for lower quintile rankings. So, a grade of C means the ETF’s average annual return for a certain period is about average (the 41st to 60th percentile) compared to its category peers.
In the PDF and print versions of this guide, grades are provided for three-, five- and 10-year annualized returns. Online, grades are provided for additional periods as well as for category risk and expense ratio. (For the latter two figures, the lower the rank, the higher the grade.)
Considerably more information is provided about each ETF online. At www.aaii.com/guides/etfguide, you will find details about which index an ETF tracks, the ETF’s portfolio allocation, beta for equity ETFs, interest rate sensitivity (how sensitive an ETF’s returns are to changes in interest rates) for bond ETFs, inception date and whether it uses leverage or is otherwise an inverse ETF. This data is updated monthly and can be downloaded to spreadsheets by clicking on the green Export to Excel button.
All AAII members can also track ETFs they own or are interested in with the newly rebuilt My Portfolio tool. Clicking on an ETF’s name or ticker symbol (or typing either into the search box located at the top of most pages on AAII.com) will call up our ETF Evaluator. This page provides valuable information and data about the ETF you are most interested in.
Which ETFs Were Included
ETFs appearing in this guide are listed on U.S. exchanges. The following explains the criteria we used to screen for and then identify which ETFs to include in the PDF and print versions of this guide.
Categories
The starting point for determining which categories to include is the ETF groups matching the AAII Asset Allocation Models. The stock and bond ETFs comprising these groups are also those most frequently held in individual investors’ portfolios. We then expanded the list of ETF categories to cover those of interest to a large number of investors. This latter group includes sector and high-yield bond ETFs. To the extent possible, we included categories similar to those appearing in the mutual fund guide.
Historical Record
ETFs were generally required to have three full years of data to be included in the Top ETFs by Category. This requirement ensures that there is a performance record of significant length and that all performance measures can be calculated.
Download the Excel spreadsheet for the Top ETFs by Category.
The requirement for three years of return data was loosened for the listings of the best- and worst-performing ETFs.
Size
All ETFs are generally required to have at least $2.0 billion in assets. The size requirement was relaxed for equity sectors, foreign and emerging markets, and fixed income categories in the Top ETFs by Category.
Expenses
Due to the generally lower cost of ETFs, a cap on expense ratios is not used. Only a small number of ETFs appearing in the PDF and print versions of this guide have expense ratios higher than the 0.62% average for the 4,900 ETFs.
Performance
To include a larger number of ETFs, performance requirements were not applied. The majority of the ETFs appearing in this guide have three-year annualized return grades of C or better. Such ETFs either outperformed their category peers or have three-year annualized returns similar to their peers.
Interest and Availability
Only those ETFs that are of general interest and are available to individual investors are included.
Go to AAII.com for More on ETFs
AAII members who would like additional details on the ETFs included in the PDF and print versions of this guide or who would like to see the ETFs that did not appear in these versions can access this information at www.aaii.com/guides/etfguide, where data on 4,900 ETFs can be found.
Additional analysis can be conducted with our Compare ETFs tool. You can use it to compare and contrast return, risk and turnover information for two or more ETFs.
More ETFs and Expanded Data Online at www.aaii.com/etfguide
4,900 ETFs
Monthly data updates
More grades for performance, risk and expense
Portfolio composition stats
Additional risk figures
Manager tenure
Plus,
Filter ETFs by category
Sort by any data field
Definitions of categories and fields
Downloadable Excel file
Also at AAII.com
ETFs area at www.aaii.com/etfs
ETF First Cuts: ETFs that meet basic filtering criteria.
Consistent Performers: A list of ETFs that have exceeded or fallen short of their category over the last three-, five- and 10-year periods, updated monthly.
Manager Changes: Lists of managers added or dropped, updated monthly.
Compare ETFs: Enter tickers to see side-by-side comparison.