4 High-Potential ETFs for 2026: Small Caps, Space Stocks, and More

Hundreds of exchange-traded funds (ETFs) launched in the last year alone, further crowding an already-dense field and making it more difficult for investors to assess which might be a good fit for their portfolios.

Many ETF investors focus on a long-term strategy with these investments—easy to do, given that they provide automatic diversification and don't require the same oversight as a portfolio of individual names. Still, the start of a new year offers the opportunity to reexamine the field and identify standout funds poised to break away in 2026.

Widely Diversified Small-Cap Fund Could Get a Boost From Rate Cuts

The iShares Core S&P Small-Cap ETF (NYSEARCA: IJR) is not a new fund; in fact, with over 25 years of history, it is among the oldest ETFs currently available. 

The lasting appeal of this ETF is its broad and affordable view of the small-cap space, as the fund holds more than 600 small companies based in the United States. The portfolio is diversified across sectors, though financials, industrials, and information technology names are the best represented.

Small-cap stocks often have significant growth potential relative to much larger peers, but they also carry substantial risk.

A massive basket of hundreds of small-caps helps to mediate this risk while still offering exposure to the next successful growth stories.

Heading into 2026, and fresh off three interest rate cuts by the Federal Reserve, small-cap stocks are likely to enjoy the lower cost of borrowing. This could help to stimulate growth and give some of these companies the catalyst necessary to make it big. The fact that IJR has returned almost 6% in the last month alone could signal future potential into the new year.

Space Stock Gains Translate to Big Boosts for a Niche Industry Fund

A much more narrowly focused fund (with a significantly higher annual fee of 0.75%), the Procure Space ETF (NASDAQ: UFO) holds just under 50 stocks of companies operating parts of their business—or otherwise reliant on activity—in space.

The list includes makers of spacecraft and satellites as well as those in the imagery, intelligence, telecommunications, and defense industries, among others.

Despite its niche focus and relatively small asset base of just $125 million, UFO has soared in the last year thanks to prominent government contracts, lower launch costs across multiple industries, and a broad increase in commercial applications for satellite technology.

The result is that UFO has surged by 12% in just a month and more than 61% year-to-date (YTD).

If space stocks continue to outperform, UFO is well-positioned to keep benefiting in 2026.

Lithium Stock Returns Could Fuel Continued Rally for LITP

The Sprott Lithium Miners ETF (NASDAQ: LITP) is prepared to take advantage of a continued recovery in the metal industry, as demand for electric vehicles and energy storage continues to grow. This is evidenced by the fund's nearly 8% gain in the last month, capping off an outstanding 79% return YTD.

LITP is a highly concentrated fund, targeting around 30 names in the international lithium industry. Just a small handful of positions represent an outsized portion of the portfolio, so investors should keep in mind that this is not a broadly diversified basket of stocks.

At 0.65% per year, this fund is relatively expensive, and both assets and trading volume are fairly low, potentially impacting liquidity. Nonetheless, LITP has tapped into an industry with incredible growth potential, and the timing may be right in the new year to continue an already-impressive rally.

Actively Managed Options Strategy With a Unique Approach

The Opportunistic Trader ETF (NYSEARCA: WZRD) stands out on this list for multiple reasons. First, having launched in June 2025, it is the shortest-lived fund on the list. Beyond that, though, it is also actively traded and significantly more expensive, with an annual fee of 1.07%.

WZRD takes an interesting approach, utilizing varied options strategies, ensuring that it has low correlation to the S&P. For investors cautious about the market overall in the year to come, WZRD might be an effective hedge. 

Though WZRD has a limited trading history, its roughly 2.5% return in the last month topped the market. Investors willing to take a chance on a new and bold ETF in 2026 may be rewarded with further appreciation.

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The article "4 High-Potential ETFs for 2026: Small Caps, Space Stocks, and More" first appeared on MarketBeat.