5 Best-Performing ETFs of February

U.S. stocks ended a volatile trading day on a high note on Friday. The S&P 500 rose 1.6%, the Dow Jones Industrial Average climbed 1.3%, while the Nasdaq Composite gained 1.5%, rebounding from a NVIDIA-led NVDA sell-off on Thursday.

Overall, Wall Street had a losing February in 2025 due to the ongoing geopolitical tensions and looming tariff threats from President Donald Trump, as well as tensions in the tech world due to the rise of Chinese AI startup DeepSeek.The Nasdaq shed nearly 5% in February, while the S&P 500 and Dow both fell around 2%, reflecting investor uncertainty over Trump's planned tariffs that are set to take effect this week.

Key Highlights of February

Investors had to contend with escalating trade tensions after China vowed to retaliate against Trump’s latest tariff moves. The President announced an additional 10% tariff on Chinese imports set to take effect Tuesday and pledged to impose new duties on Mexico, Canada and the European Union. The prospect of an intensifying trade war added to investor anxiety.

Adding to the trade turbulence, an economic agreement between the United States and Ukraine remained unresolved after a heated exchange in the Oval Office between President Trump and Ukrainian President Volodymyr Zelensky. The shouting match left negotiations in limbo, further clouding the geopolitical outlook as markets braced for more uncertainty.

Meanwhile, economic data offered mixed signals. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, cooled to 2.6%, aligning with expectations and easing concerns about inflation. However, consumer spending fell 0.2% in January, missing forecasts of a 0.1% increase and contrasting with December’s 0.8% rise, raising concerns about slowing economic momentum.

Meanwhile, the University of Michigan’s consumer sentiment index fell to 64.7 in February — a nearly 10% decline — as consumers voiced inflation concerns, particularly due to the likely new tariffs. The five-year inflation outlook climbed to 3.5%, the highest since 1995.U.S. existing home sales dropped more than expected to 4.08 million units in January (read: Time for Defensive Sector ETFs?)

Meanwhile, the cryptocurrency market continued its slump, with Bitcoin plunging 7% to its lowest level since November, marking a 25% drop from its record high amid a broader crypto sell-off. As markets wrapped up a turbulent February, investors remained cautious about the uncertainty surrounding trade policies, geopolitical developments, and economic trends heading into March.

Best-Performing ETFs of February

YieldMax PLTR Option Income Strategy ETF PLTY – Up 29.7%

Palantir Technologies PLTR stock got a beating in February. Overall, the stock gained 1.4% past month.Probably, this is why, this high-yield safer version of PLTR ETF surged in February. Note that the YieldMax PLTR Option Income Strategy ETF is an actively managed fund that seeks to generate monthly income by writing call options on PLTR. The ETF yields 29.52% annually (read: Time to Buy the Dip in Palantir Stock With These ETFs?).

KraneShares Hang Seng TECH Index ETF KTEC – Up 29.3%

China ETFs ruled in February. Several China-based ETFs surged last month on the DeepSeek rise as well as policy stimulus in that country (read: China ETFs in Tug-of-War Between Tariff Threats & Policy Boost).

ProShares Short Ether ETF SETH – Up 27.9%

Ethereum prices lost about 30% in February as cryptocurrencies fell out of investors’ favor. No wonder, inverse ether ETF gained last month.

United States Natural Gas Fund LP UNG – Up 20.5%

U.S. natural gas prices stayed high from early February as cold weather weighed on supply and boosted demand. Prices surged as an Arctic blast boosted heating demand while freezing oil and gas wells, disrupting production.

Breakwave Dry Bulk Shipping ETF BDRY – Up 18.5%

The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research