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Jan. 22, 2026 7:15 AM ET, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Summary

• 2025 was a great year for equity performance. For the third straight year, QQQ (Invesco QQQ Trust) was the top-performing ETF in our review with a robust 20.8% gain. It outgained the 17.8% increase posted by Vanguard S&P 500 ETF (VOO) by more than 300 basis points.
• Our July review of the first half of 2025 showed a 700-basis point difference in return between QQQ and VOO. This margin was halved by year-end. There was a notable fourth-quarter trend to reduce exposure to a potential “AI crash” by rotating toward stocks with more reasonable valuations.
• The first two mixed-return weeks of 2026 provided more evidence that the fourth-quarter trend may continue. Value ETF VTV has gained 3%, while its growth counterpart VUG is down 0.3% on the year. Small-cap IWM has gained 6.8%, much better than S&P 500 proxy VOO.
• Looking ahead to relative performance in 2026, our models are still most bullish on XLK, the State Street Technology SPDR, despite widespread fears of a bubble.

Aksana Kavaleuskaya/iStock via Getty Images

Typically, the first full blog of the year reviews returns of benchmark index ETFs and opines on what prevailed in the past year through five years, then provides analysis that could provide insights into the future

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