5 Best ETFs for the Rest of 2026

Every year, as we get into June and July, Wall Street's prognosticators review their original market outlooks for the year and provide updated thoughts about what might happen over the remaining months. Naturally, without fail, a couple funny things always seem to happen:

• Some wild event occurs that throws a lot of those predictions for a loop. COVID. Russia going to war with Ukraine. Rapidly shifting tariff policies. The U.S. goes to war with Iran.
• Those prognosticators end up being correct in a lot of ways, regardless. Broad S&P 500 price targets aren't exactly reliable. But you would be amazed how often the "pros" are fairly accurate as it pertains to corporate earnings and emerging themes. In many cases, outside events don't derail these predictions—they just throw off the timing.

Those factors alone make trying to deliver a "best anything" list difficult—ETFs, stocks, fashion choices, whatever. Then, once you also stop to consider that every single reader has their own long-term investing goals, risk tolerances, and time horizons ... you start to realize that no best-of list can juggle every one of those variables perfectly.

That's why I take a different approach.

I include some tactical ETFs that line up with experts' predictions for what's to come, but also core ETFs everyone should hold, as well as defensive ETFs you can deploy during periods of market volatility.

Let's look at some of the more tactical funds from my full list of the best ETFs for the rest of 2026.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

1. Global X Robotics & Artificial Intelligence ETF

• Type: Tactical
• Style: Thematic (Artificial intelligence)
• Assets under management: $3.2 billion
• Dividend yield: 0.5%
• Expense ratio: 0.68%, or $6.80 per year on every $1,000 invested

What is BOTZ? The Global X Robotics & Artificial Intelligence ETF (BOTZ) invests in companies that could benefit—in one of several ways—from advances in robotics and AI technologies.

What does BOTZ hold? Global X sees robotics and AI having a "wide-reaching application, extending far beyond industrial activity." BOTZ invests with that in mind, building a somewhat tight portfolio of 61 companies across the globe, and across multiple sectors and industries.

As you might expect, information technology is a significant portion of the fund—but even at a third of assets, it's still not tops, and it's less than many other AI ETFs. Instead, industrials lead here, at almost 50% of the portfolio. Healthcare makes up another 8%, with the rest sprinkled across utilities, materials, and consumer discretionary names.

Related: 7 Space ETFs for the Next Frontier of Investing

Why should you consider BOTZ? I said in 2025 that "as far as artificial intelligence is concerned, the cat is absolutely out of the bag. Chip and software stocks still have growth potential, to be sure, but the whole world knows, and many of these firms are priced for protection."

That hasn't changed a bit since then—making it all the more important to be discerning about AI opportunities.

"AI infrastructure demand is outpacing supply, and capital expenditure across hyperscalers is expected to reach $837 billion for 2026," Janus Henderson Investors says in its 2026 midyear outlook. "Meanwhile, U.S. productivity rose 2.9% year over year in Q1, the strongest increase in two years, suggesting AI adoption is showing in the data.

"These trends point to compelling growth prospects in companies supporting the AI buildout and those integrating AI into core operations."

Global X's BOTZ provides wider-ranging AI exposure (which goes past the tech sector) and could end up being one of the best ETFs for the rest of 2026 if the risk-on AI trade continues.

2. State Street Materials Select Sector SPDR ETF

• Type: Tactical
• Style: Sector (Materials)
• Assets under management: $8.3 billion
• Dividend yield: 1.7%
• Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested

What is XLB? The State Street Materials Select Sector SPDR ETF (XLB) is an index fund that invests in materials-sector stocks within the S&P 500.

What does XLB hold? The XLB ETF holds all material-sector stocks in the S&P 500, which includes companies involved in industries such as chemicals, metals and mining, paper and forest products, containers and packaging, and construction materials. Right now, that's a roughly 26-stock set of names including Linde (LIN), Newmont (NEM), and Corteva (CTVA).

XLB is also market cap-weighted, and because the ETF's portfolio is so tight, numerous stocks have significant weights of 4% or above. But the most noteworthy holding is Linde, which currently accounts for 14% of the ETF's assets. And unlike sectors such as utility that move in lockstep, materials companies—while generally cyclical—involve numerous disparate industries. So the heavy bet on Linde right now is effectively a heavy bet on industrial gases.

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Why should you consider XLB? Materials stocks are one of the premier ways to invest in the growth of the U.S. and global economies. Greater financial strength lends itself to spikes in manufacturing, construction, and infrastructure, which means more demand for lumber, steel, cement, and other materials. Moreover, raw material prices and commodity values tend to appreciate alongside inflation, which can make the sector a decent hedge against rising prices.

"We maintain a positive view on the Materials sector supported by resilient structural demand for key industrial metals, rising US manufacturing activity, and strong earnings momentum in key underlying industries," State Street Investment Management says in its 2026 midyear report.

For instance, investments in AI-related power demand, grid infrastructure, and electrification are helping the outlook for metals like copper and lithium. And rising U.S. manufacturing activity could boost demand for industrial chemicals.

Yes, XLB is perhaps one of the most boring, staid funds on the market. But for investors unsure which direction the market's winds will blow, it could be one of the best ETFs to buy for the rest of 2026.

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3. Invesco Pharmaceuticals ETF

• Type: Tactical
• Style: Industry (Pharmaceuticals)
• Assets under management: $429.1 million
• Dividend yield: 0.9%
• Expense ratio: 0.57%, or $5.70 per year on every $1,000 invested

What is PJP? The Invesco Pharmaceuticals ETF (PJP) is an industry ETF that provides exposure to pharmaceutical companies within the healthcare sector.

What does PJP hold? The PJP tracks the Dynamic Pharmaceutical Intellidex Index (Index), which evaluates pharmaceutical companies based on a variety of criteria, including price and earnings momentum, quality, management action, and value. 

This is a tight portfolio of just 28 pharma firms, but it does span the market-cap gamut, resulting in a much lower average holding market cap of about $31 billion versus the category average ($72 billion). Investors enjoy access to true "Big Pharma" names like AbbVie (ABBV) and Johnson & Johnson (JNJ), but also smaller up-and-comers such as Collegium Pharmaceuticals (COLL) and Tarsus Pharmaceuticals (TARS).

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

Why should you consider PJP? Healthcare underperformed the market by a few points in 2025, but pharmaceuticals took off. And Aniket Ullal, SVP and Head, ETF Research & Analytics, CFRA, saw a similarly bifurcated sector in 2026.

"We expect a bounceback in the pharma / biotech sector (other sectors in healthcare like managed care will continue to be under pressure)," he told us in late 2025. "CFRA currently has Buy or Strong Buy ratings on many holdings like Eli Lilly, Amgen, and Merck." UBS analysts agreed: "Pharma & Biotech stands out for strong momentum, as AI accelerates drug discovery and clinical trial efficiency," they wrote.

I said at the start of the year that "rather than own the whole sector, then, the best ETF for 2026 could end up being a more industry-specific play such as PJP." So far, so good.

The broader healthcare sector has struggled in 2026, significantly underperforming the S&P 500 as I write this. Medicare Advantage rate-increase proposals slammed insurers specifically, while investors have broadly eschewed defensive sectors to chase growthier parts of the market. However, the pharmaceuticals story is alive and well, outrunning the market through late July. There's no reason to move away from this call across the rest of the year.

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4. WisdomTree Japan Hedged Equity Fund

• Type: Tactical
• Style: Single-country (Japan)
• Assets under management: $7.0 billion
• Dividend yield: 1.0%
• Expense ratio: 0.48%, or $4.80 per year on every $1,000 invested

What is DXJ? The WisdomTree Japan Hedged Equity Fund (DXJ) is an index fund that provides single-country exposure to Japanese equities.

What does DXJ hold? WisdomTree's Japan ETF tracks the WisdomTree Japan Hedged Equity Index, which provides exposure to large-, mid- and small-cap dividend stocks from Japan. However, it also neutralizes exposure to fluctuations in the Japanese yen relative to the U.S. dollar by holding forward currency contracts, as well as excluding companies that derive 80% or more of their revenue from Japan. Basically, the index is designed to have greater returns than similar non-hedged products when the yen is weak, and worse returns when the yen is strong.

DXJ currently owns about 430 stocks, with heavy weights in industrials (25%), financials (21%), consumer discretionaries (16%), and technology companies (14%). Top holdings are a who's who of Japanese blue chips, including Mitsubishi UFJ Financial (MUFG), Toyota Motor (TM), and Sumitomo Mitsui Financial Group.

Related: The 13 Best Mutual Funds You Can Buy Right Now

Why should you consider DXJ? "Japanese equities enter 2026 with supportive political, economic, and policy conditions, underpinned by the new Takaichi administration and strengthened U.S.-Japan ties," Amova Asset Management's Japan equity team said heading into the new year.

The country's stocks have done well so far in 2026, and Amova still likes the group for the rest of the year.

"Japan remains our preferred equity market," Amova Asset Management says in its second-half outlook. “The Committee sees Japanese equities remaining structurally supported not only by robust earnings but also by improving governance and the emergence of positive real wages. Another equity-supportive factor is the potential for domestic reflation broadening and in turn supporting financial institutions and other sectors as they benefit from the ongoing resilience and reflationary tendencies of the domestic economy.”

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5. Vanguard FTSE Europe ETF

• Type: Tactical
• Style: International region (Europe)
• Assets under management: $30.0 billion
• Dividend yield: 2.9%
• Expense ratio: 0.06%, or 60¢ annually on a $1,000 investment

What is VGK? The Vanguard FTSE Europe ETF (VGK) is an index fund that owns the stocks of predominantly developed-market European companies.

What does VGK hold? VGK, which tracks the FTSE Developed Europe All Cap Index, owns 1,230 European stocks of all sizes. The fund is overwhelmingly loaded up with large caps such as Dutch multinational chipmaker ASML Holding (ASML), British bank HSBC Holding (HSBC), and Swiss consumer giant Nestlé (NSRGY), though it does provide about 15% exposure to the region's mid-caps and a little exposure to smaller companies from the continent.

The portfolio is unsurprisingly tilted toward the region's biggest and most stable economies. U.K. firms currently make up 23% of assets, followed by Switzerland (14%), France (14%), and Germany (13%). And like many international funds, VGK is heavy in financials (24%) and industrials (20%).

Also typical of blue-chip international funds, Vanguard FTSE Europe ETF pays much more in dividend income than comparable U.S. funds. VGK's nearly 3.0% yield is roughly thrice what the S&P 500 is paying right now.

Related: 12 Best Vanguard ETFs You Can Buy [Build a Low-Cost Portfolio]

Why should you consider VGK? Europe hasn't been the flashiest point on the globe in 2026, only managing to crawl to a single-digit gain so far in 2026. Still, JPMorgan analysts see more upside from the continent throughout the rest of the year:

"Europe has been hurt relatively by geopolitical uncertainty, but at 12x it is far from priced for perfection, and will benefit as oil price and interest rates retreat back lower, in our view. Bottom up, European earnings growth is looking better this year, after a prolonged soft patch."

VGK represents one of the best ETFs for anyone who wants European equity exposure for a song.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

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