Best Performers of Feb 2025 If there’s one word for H1 2026, it’s divergence. Some ETF categories delivered triple-digit gains while others nursed double-digit losses. The Iran war and its disruption of Middle East oil flows dominated Q1, sending energy ETFs to extraordinary levels before a partial reversal. Semiconductors, fueled by relentless AI infrastructure buildout,…
If there’s one word for H1 2026, it’s divergence. Some ETF categories delivered triple-digit gains while others nursed double-digit losses. The Iran war and its disruption of Middle East oil flows dominated Q1, sending energy ETFs to extraordinary levels before a partial reversal. Semiconductors, fueled by relentless AI infrastructure buildout, surged up to 100%. And the broad U.S. market, after stumbling early, is now up double digits and approaching fresh highs.
Here’s a category-by-category breakdown of the best ETFs for H1 2026 — and what to watch for the second half.
Energy: The Shock Winner of Q1
No one had “tanker shipping +760%” on their 2026 bingo card. Yet that’s where Breakwave Tanker Shipping ETF (BWET) sits year to date, following Iran’s effective closure of the Strait of Hormuz in January and the subsequent oil price surge from roughly $60 to over $118 per barrel by end of Q1.
The major oil ETFs delivered accordingly:
USO (United States Oil Fund): +95.92% YTD
BNO (United States Brent Oil Fund): +85.35% YTD
XLE (Energy Select Sector SPDR): +37.90% through Q1
XOP (SPDR S&P Oil & Gas E&P ETF): +44.60% through March
The gains were broad across exploration, services, gasoline, and crude. For long-term investors, equity-based energy ETFs like XLE or VDE may be preferable to futures-based products like USO, which can suffer from contango decay over time.
Semiconductors: The Year’s Defining Story
If energy owned Q1, semiconductors owned all of H1. Fueled by AI chip demand, high-bandwidth memory (HBM), and data center buildout, semiconductor ETFs delivered some of the most remarkable returns in recent ETF history:
ETF
Name
YTD Return
FTXL
First Trust Nasdaq Semiconductor ETF
+100.06%
PSI
Invesco Semiconductors ETF
+94.81%
SOXX
iShares Semiconductor ETF
+90.03%
XSD
SPDR S&P Semiconductor ETF
+87.03%
SMH
VanEck Semiconductor ETF
+68.78%
DRAM
Roundhill Memory ETF
~+77%
SOXX edges out SMH on pure return but SMH’s larger AUM ($58.8B) makes it the more liquid choice. The Roundhill Memory ETF (DRAM) — focused on high-bandwidth memory producers for AI — gained roughly 77% YTD on its way to nearly $14B in assets, one of the fastest-growing new ETFs in recent memory.
South Korea: The Surprise Standout
The biggest ETF story few saw coming: South Korean equity funds were among the world’s top performers in H1 2026.
EWY (iShares MSCI South Korea ETF): +122.90% YTD
FLKR (Franklin FTSE South Korea ETF): +118.28% YTD
The catalyst: Samsung Electronics and SK Hynix, both dominant in HBM chip production for AI infrastructure, represent large weights in Korean equity indices. The same AI demand wave lifting DRAM and SOXX drove South Korean markets to stunning outperformance.
AI Thematic ETFs: Infrastructure Beats Software
Beyond semiconductors, AI-focused thematic ETFs posted strong returns in H1 — but the pattern is clear: infrastructure exposure outperformed software exposure.
AIS (VistaShares AI Supercycle ETF): +108.13% YTD
TCAI (Tortoise AI Infrastructure ETF): +85.28% YTD
CHAT (Roundhill Generative AI & Technology ETF): +73.05% YTD
IGPT (Invesco AI and Next Gen Software ETF): +71.30% YTD
Chips, data centers, power, and networking all outperformed pure software names — a picks-and-shovels trade that continues to reward investors.
Broad U.S. Market: Stumble, Then Strong Recovery
The S&P 500 dropped over 4% in Q1 as Iran fears and tariff uncertainty weighed on sentiment. The recovery has been decisive:
QQQ (Invesco QQQ Trust / Nasdaq-100): +21.06% YTD
IWM (iShares Russell 2000 ETF): +17.60% YTD
SPY (SPDR S&P 500 ETF): +11.54% YTD
VOO (Vanguard S&P 500 ETF): +11.55% YTD
Small-cap IWM’s strong showing (+17.6%) suggests the rally has broadened beyond mega-cap tech — a healthy sign for the durability of the 2026 bull market. QQQ’s Nasdaq-100 composition gave it a meaningful edge over plain S&P 500 products.
Dividends: SCHD’s Comeback Year
Two of the most popular dividend ETFs, two very different stories:
SCHD (Schwab U.S. Dividend Equity ETF): +18.30% YTD
SCHD, which screens for value, quality, and yield, has benefited from the rotation toward dividend-growth stocks — a trend validated by ProShares Dividend Aristocrats (NOBL) absorbing 50% of its entire AUM in a single week in late May. VIG’s growth-tilted approach lagged as value reasserted itself in Q2. For income-focused investors, SCHD’s 2026 showing makes a strong case.
International: An Early Lead, Then Catch-Up
International developed-market ETFs were the consensus overweight early in 2026, as dollar weakness and geopolitical diversification drove strong inflows. As U.S. stocks recovered, the gap narrowed — but international remains solidly in the green:
VEA (Vanguard Developed Markets): +15.25% YTD
SCHF (Schwab International Equity ETF): +15.93% YTD
Diversifying internationally paid off in early 2026 when U.S. markets were volatile, and those gains have held.
The Losers: Crypto, Long Bonds, and Gold
Crypto ETFs had a punishing first half. Bitcoin fell sharply, and the broader token ecosystem dropped further:
IBIT (iShares Bitcoin Trust ETF): -22.6% through Q1; Bitcoin now trading below $70,000
ETHA (iShares Ethereum Trust ETF): -29.42%
Solana ETFs (VSOL, FSOL, TSOL, BSOL): -32% to -35%
Long-duration bond ETFs surrendered their early gains as rates stayed high:
Gold is taking a breather after its stunning 2025 run (+63.68%):
GLD (SPDR Gold Shares): +3.77% to +5.25% YTD — positive, but a dramatic slowdown from last year’s historic performance
What to Watch in H2 2026
VOO at $1 trillion. Vanguard’s flagship S&P 500 ETF sits at $995 billion in AUM — just $5 billion from becoming the first ETF in history to cross $1 trillion. The milestone is imminent and will draw widespread attention to passive index concentration risk.
SpaceX IPO. ETF filings are piling in ahead of the SpaceX listing, and NASA (Tema Space Innovators ETF) pulled in $577 million in a single day in late May. The IPO could dramatically reshape flows into space-themed ETFs.
The dividend rotation. NOBL’s $5.6 billion single-week inflow is the kind of signal that often precedes a sustained rotation. If investors continue moving from growth to quality dividends, SCHD, NOBL, and VIG all stand to benefit in H2.
Crypto at a crossroads. Bitcoin trading below $70,000 is a key technical level. A recovery would revive IBIT and ETHA after a bruising first half. A sustained break lower would accelerate outflows from an already beaten-up category.
Bottom Line
H1 2026 rewarded investors positioned in energy (Q1), semiconductors (all half), and AI infrastructure themes. The broad U.S. market delivered solid double-digit returns despite early turbulence, and dividend investors who held SCHD have had an outstanding year. Crypto faced steep losses, and bonds mostly tread water.
Heading into H2, the defining questions are whether the semiconductor rally can sustain, whether VOO’s $1 trillion milestone signals passive crowding risk, and whether crypto can find a floor. This is not a market that rewards complacency.
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