You might think AI and tech stocks in the S&P 500 are where the most money is to be made. But guns and gold ETFs have been a much better bet.
Nine out of the 10 best returning actively traded sector ETFs this year own either defense stocks or shares of precious metals miners, says Morningstar Direct. And while tech stocks are enjoying a strong month, guns and gold plays still remain far ahead for the year.
Specifically, the Select Stoxx Europe Aerospace & Defense ETF returned more than 65% this year. That makes it the No. 1 returning sector ETF in 2025 so far, says Morningstar Direct.
And it's followed by 62% and 56% returns, respectively, of the Sprott Gold Miners ETF and VanEck Junior Gold Miners ETF. The only nondefense tech play doing anywhere as well is the Global X Video Games & Esports ETF, returning just 38%.
Military events and political uncertainty are fueling demand for both defensive and gold miner ETFs, says Todd Rosenbluth, head of research at TMX Vetta Fi. "Increased geopolitical tensions and boosted military spending by European nations has driven the industry higher in the first half of the year," he said. "Even if tensions moderate we think this theme has legs in the second half."
Gold Miners Hit The Jackpot Beyond S&P 500
It's hard to overstate just how strong the rally in gold miner ETFs has been. "The burning-hot performance of gold miner stock ETFs this year has been something to watch," said Cinthia Murphy of TMX Vetta Fi.
Not surprisingly, rising gold prices this year explain the rally in gold miner ETFs. The price of gold is up more than 30% this year. Demand for gold is heating up on concerns of global inflation, rising government indebtedness and unsettled trade disputes.
Barring an unexpected cooling of global economic trends, the prognosis for gold prices remains strong, Murphy says.
Additionally, the gold miners are performing well operationally. Newmont is the largest position in Sprott Gold Miners at 12.4%. The company earned $1.25 a share in the first quarter, topping views by nearly 36%. And analysts think the company will make $4.38 a share this year, up nearly 26% from 2024.
Defense Stocks Are No Slouch Either
The push by Europe to arm itself amid a pullback in U.S. support is critical as war rages in Ukraine.
German defense play Rheinmetall is one of the largest positions in Select Stoxx Europe Aerospace & Defense at 14.1%. The stock's one-year return is a staggering 268%. And much of that is due to hopes about the future. Analysts think the company will earn $34.03 a share in 2025, up nearly 70% from 2024.
Europe's military spending spree isn't expected to ease up anytime soon. Many European nations have committed bigger pieces of GDP to put toward defense.
But investors are skeptical about the run in gold miners' shares. "Concerns about inflation and its impact on miners' ability to keep production costs down may be shaking confidence," Murphy said. "Uncertainty and risk tolerance in the current market may be other factors."
Top Sector ETFs This Year
Gold and guns are winning themes
| Name | Ticker | YTD Return % | Assets ($ millions) |
|---|---|---|---|
| Select STOXX Europe Aerospace & Defense | EUAD | 65.96% | 934.40 |
| Sprott Gold Miners | SGDM | 61.96 | 406.25 |
| VanEck Junior Gold Miners | GDXJ | 56.23 | 5,445.50 |
| iShares MSCI Global Gold Miners | RING | 55.50 | 1,448.64 |
| Global X Defense Tech | SHLD | 54.13 | 2,756.32 |
| VanEck Gold Miners | GDX | 52.93 | 15,712.07 |
| iShares MSCI Global Silver&Mtls Miners | SLVP | 51.42 | 309.94 |
| Global X Silver Miners | SIL | 48.57 | 1,936.89 |
| Amplify Junior Silver Miners | SILJ | 45.62 | 1,373.65 |
| Global X Uranium | URA | 44.40 | 3,797.15 |
| Benchmark: S&P 500 | 4.25 |
