Innovative ETF Strategies That Are Paying Off This Summer

Exchange-traded fund (ETF) inflows reached an astonishing $1 trillion for the first half of 2026 alone, the latest sign that investors everywhere are continuing to lean heavily on these vehicles to simplify their experience and add built-in diversification to their portfolios. Unsurprisingly, the number of funds available continues to skyrocket, although many investors stick with major ETFs tracking the S&P or other prominent indexes instead of venturing into unique strategies.

There's certainly nothing wrong with a low-cost S&P 500 fund, but distinctive strategies have the potential to achieve strong returns with a niche basket of stocks. Although this approach to ETF investing may carry some additional risks as a more speculative play, it nonetheless has paid off for a few funds in particular. The ETFs below, with innovative approaches to biotech clinical trials, buy-now-pay-later programs, and disruptive medicine, respectively, may be worth watching.

Distributing the Biotech Risk Across an Entire Portfolio

The Virtus LifeSci Biotech Clinical Trials ETF (NYSEARCA: BBC) is a fund holding approximately 132 positions in biotechnology stocks with clinical trials ongoing. These companies range from drug manufacturers to novel therapeutics firms and from small start-ups to major producers, although most of the fund is made up of small-cap names or smaller.

Clinical stage biotechs are a highly speculative industry overall—companies pin most or all of their success on the potential of a small number of drug trials in a race against time as they burn through money, most often in a pre-profitability state. Of course, for companies that do see success in their trials, the potential for outsized rewards is tremendous. A fund like BBC takes that risk and spreads it across dozens of positions. If even a small number of these stocks soar thanks to successful trials, investors can come out on top.

Investors will pay a premium price tag for this benefit, and BBC has an expense ratio of 0.65%. It also has minuscule assets under management (AUM) and very modest trading volume, as the focus of the fund is indeed quite niche. However, the fund's strategy has proven successful, with returns of about 30% year to date (YTD).

Buy-Now-Pay-Later Firms Get a Dedicated ETF

With oppressive inflation and other cost-of-living concerns persisting, installment lending has become a major growth area in the payments and finance space. Buy-now-pay-later platforms make up an expanding lending infrastructure that covers a range of sectors and industries. The Corgi Buy Now Pay Later ETF (NYSEARCA: LATR) focuses not only on the companies providing those platforms, but on the broader ecosystem in which they exist—including card-issuing networks, identity verification companies, merchant integration firms, and more.

As an actively managed fund, LATR may surprise investors with its fairly modest 0.35% expense ratio. This management approach serves the ETF well as it allows fund managers to be particularly nimble in response to a rapidly changing industry. Nonetheless, major payments players like Visa Inc. (NYSE: V) and Mastercard Inc. (NYSE: MA) dominate—together, these two companies alone account for almost a quarter of the fund's invested assets. Alongside them, though, investors will also find smaller names with potential for faster growth.

Launched in May 2026, LATR has incredibly low AUM and trading volume, so investors should beware potentially significant liquidity concerns. Still, since launch, the fund has already returned nearly 10%.

An Actively Managed Take on Healthcare Disruptors

For another unique take on the healthcare sector, the Fidelity Disruptive Medicine ETF (NASDAQ: FMED) has a theme that is distinct from BBC above. This fund targets so-called "disruptive medicine" companies, including those that are involved in innovative technologies and developments that could be transformative for the sector. Popular themes include genomics, gene therapy, robotic surgery, medical devices, and more.

Unlike BBC, FMED is an actively managed fund, and its 79 holdings are mostly focused on the domestic market. Small-cap stocks figure heavily in this ETF as well. For a fund with active management, FMED's expense ratio of 0.50% is standard; however, compared to LATR above, it may seem somewhat high to cost-conscious investors. At the same time, like the ETFs above, FMED is also not especially liquid.

This fund's YTD performance does not stand out as much as its momentum in the last month. During that period, FMED has returned about 5%; over the same period, the S&P 500 is up under 1%. While not as new to the market as LATR, FMED does not have a substantial history. Still, investors who are convinced by its strategy and recent success may find it to be a potential buy-and-hold option for a unique view of healthcare.

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