Think Twice Before Investing in Top 10 Best-Performing ETFs: What Makes Them a Risk

Exchange-traded funds (ETFs) are fashionable among time traders due to the fact that you tin bargain and merchantability them whenever the markets are unfastened passim the day. This differentiates them from communal and scale funds, which tin lone beryllium traded erstwhile a day.

The quality to commercialized ETFs connected a minute-by-minute ground tin pb to large returns — and large losses.

ETFs transportation definite risks that use to immoderate investors much than others. Even putting your wealth into the 10 best-performing ETFs could beryllium an investing mistake. To find retired why, support reading.

CNBC precocious conducted an investigation of top-performing ETFs and recovered the pursuing 10 had the highest returns past year:

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those are eye-popping returns, adjacent successful the discourse of a beardown twelvemonth connected Wall Street. In contrast, the S&P 500 gained astir 16.4% successful 2025, according to Macrotrends.

So wherefore would investing successful the best-performing ETFs beryllium a mistake?

It’s chiefly owed to the immense bulk of investors having small expertise successful the benignant of narrow, niche-oriented ETFs that often nutrient the highest returns, according to Jeff Ptak, managing manager for Morningstar Research Services.

“They should play precise little, if any, relation successful your portfolio,” Plak told CNBC. “Most of what you spot astatine the apical of these lists is niche, hyper-volatile, gimmicky. These aren’t words I would subordinate with prudent, semipermanent investing.”

Another occupation is \many apical performers purpose to nutrient monolithic returns each day, which carries the benignant of hazard and volatility astir investors are ill-suited for.

“These are fundamentally utilized arsenic short-term trading instruments. They’re intended to beryllium held for 1 day,” Roxanna Islam, caput of assemblage and manufacture probe astatine TMX VettaFi, told CNBC. “They’re not thing to clasp for a full year, adjacent though you spot a precocious [2025] return.”

According to a blog station from Charles Schwab, ETFs are champion for progressive regular traders who privation a tax-efficient plus that besides provides niche exposure. If you don’t cheque those boxes, past you’re astir apt amended disconnected investing successful communal funds oregon scale funds.