6 Best-Performing ETF Areas of Second Quarter 2025

The second quarter of 2025 has been marked by sharp volatility in U.S. equity markets, triggered by aggressive tariff measures from President Trump and mounting geopolitical tensions. Despite the turbulence, the S&P 500 is hovering around its all-time high—a remarkable turnaround given that the index was on the verge of a bear market just two months ago.

The S&P 500 flirted with bear market territory in April, wiping out nearly $9.8 trillion in market value. However, May and June brought a robust recovery. The S&P 500 index climbed 6.15% in May, its best monthly performance since November 2023 and its strongest May since 1990. It has added about another 3% in June, recovering trillions in lost market capitalization.

Nasdaq Leads the Charge

The S&P 500 gained 10% over the past three months, the Dow Jones Industrial Average rose a more modest 4.3% while the Nasdaq Composite Index surged 13.3% during that time frame. Tech’s dominance played a key role in this divergence, as investors turned to the high-growth names.

Investor optimism surged as tech and AI stocks staged a strong comeback. Mega-cap leaders like NVIDIA and Microsoft led the charge, driving the Nasdaq 100 to a new all-time high—its first since February. Despite ongoing geopolitical volatility and still-high interest rates, these tech giants are increasingly viewed as a modern-day safe haven.

Tariffs and Geopolitics: Risks and Relief

While Trump’s tariff policy remains aggressive—with average tariff levels now at a 90-year high—he has recently adopted a more measured tone. Deals with the UK and a tentative truce with China have helped calm investor nerves, suggesting the worst may be over.

Adding to the positive tone, hopes for de-escalation in the Israel-Iran conflict have buoyed investor sentiment. The easing of global tensions helped reduce risk-off positioning, further supporting the stock market rebound.

Best-Performing ETF Areas of Second Quarter

Against this backdrop, below we highlight a few winning ETF areas of the second quarter 2025.

Korea Defense Industry

PLUS Korea Defense Industry Index ETF KDEF – Up 56.91%

The underlying Korea Defense Industry Index is designed to track the performance of South Korean companies that have demonstrated high relevance to defense. The fund charges 65 bps in fees.

Korean defense stocks have seen a surge over the past year, as the companies secured a number of major international contracts to export their defense systems.

Crypto

First Trust SkyBridge Crypto Industry and Digital CRPT – Up 54.30%

VanEck Digital Transformation ETF DAPP – 43.08%

Bitcoin surged in Q2 by over 30% on growing institutional adoption and regulatory tailwinds. The move has boosted the crypto-related stocks. Both ETFs are heavy on Coinbase COIN. Coinsebase’s recent rally—up around 40% this year—has been fueled in part by the Senate’s passage of the GENIUS Act. The legislation would create a federal framework for stablecoins, helping to legitimize and support growth in digital assets like USDC.

Uranium

Global X Uranium ETF URA – Up 52.15%

As the demand for AI soars and clean energy needs grow, tech giants are turning to nuclear power to meet their energy demands. The growing interest in nuclear energy and increasing AI-driven data centers are expected to boost the demand for uranium. Trump’s executive orders and energy deals are also in favor of uranium.

Platinum

GraniteShares Platinum Trust PLTM – Up 38.7%

Platinum has surged more than 50% in 2025, driven by supply shortages and rising Chinese imports. A projected deficit, declining mine output, weak recycling, and falling inventories are tightening supply. Meanwhile, demand remains strong from autos, jewelry, and a jump in investment inflows.

Technology

ARK Next Generation Internet ETF ARKW – Up 37.22%

The ARK Next Generation Internet ETF is an actively managed ETF that seeks long-term growth of capital by investing under normal circumstances primarily in domestic and U.S. exchange traded foreign equity securities of companies that are relevant to the theme of next generation internet. The fund charges 82 bps in fees.

Cathie Wood’s ARK innovations have again started to glow.The standout performers among ARKK’s top holdings have been recent Coinbase and Roblox.

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This article originally published on Zacks Investment Research (zacks.com).

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