Exchange-traded funds (ETFs) are popular for day traders due to their ability to be bought and sold throughout the day, unlike mutual and index funds. ETF trading on a minute-by-minute basis can yield substantial returns, but also significant losses. CNBC conducted an analysis of top-performing ETFs with returns far surpassing the S&P 500’s 16.4% gain in 2025.

Investing in the best-performing ETFs might be a mistake for most investors, as these funds often target niche markets and exhibit high volatility. Jeff Ptak of Morningstar Research Services advises caution, noting that these ETFs should play a minimal role in one’s portfolio due to their risky and gimmicky nature. Many top-performing ETFs aim for daily returns unsuitable for most investors seeking long-term growth.

ETFs are best suited for active daily traders seeking tax-efficient assets with niche exposure. Charles Schwab recommends ETFs for those specific criteria, while suggesting mutual funds or index funds for investors who do not fit that profile. It’s crucial to understand the risks and volatility associated with ETFs before investing.

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