Top-Rated ETFs to Supercharge Your Portfolio in July 2025

• Why ETFs Belong in Every Investor's Toolkit
• Crafting Your ETF Shopping List
• Morningstar's Gold Standard for ETFs
• Equity ETFs: Growth Engine of Your Portfolio
• Fixed Income: Your Portfolio's Shock Absorber
• Niche Plays for Sophisticated Investors
• Performance Powerhouses: Top 5 ETFs by Returns
• ETF Investor FAQ

Looking to diversify your investments with minimal hassle? Exchange-traded funds (ETFs) offer a straightforward way to build a robust portfolio without the high minimums of mutual funds. But with thousands of options available, how do you pick the winners? This guide breaks down the best ETFs across categories—fromlarge-cap stocks to niche thematic plays—based on Morningstar's rigorous analysis. Whether you're a hands-off investor or a tactical allocator, these top-rated funds could be the building blocks your portfolio needs.

ETFs have revolutionized investing by combining the diversification of mutual funds with the flexibility of stocks. Unlike their mutual fund counterparts, ETFs trade throughout the day on exchanges like BTCC, often with lower fees and no investment minimums. The BTCC team has observed countless investors (myself included) use them to quickly implement asset allocation strategies that WOULD otherwise require buying dozens of individual securities.

Source: TradingView

What makes ETFs particularly powerful is their ability to provide instant diversification across entire sectors or asset classes. For example, a single technology sector ETF might hold positions in 100+ companies, giving investors exposure to the entire industry with one purchase. This efficiency has made ETFs the go-to choice for both retail and institutional investors looking to build robust portfolios.

The transparency of ETFs is another key advantage. Unlike traditional mutual funds that only disclose holdings quarterly, most ETFs publish their holdings daily. This level of transparency allows investors to know exactly what they own at any given time, reducing uncertainty during volatile market conditions.

Cost efficiency remains one of the most compelling reasons to use ETFs. According to data from CoinGlass, the average expense ratio for ETFs is significantly lower than actively managed mutual funds. This cost advantage compounds over time, potentially adding thousands of dollars to an investor's returns over a long investment horizon.

ETFs also offer tax advantages in taxable accounts. Their unique creation/redemption process typically results in fewer capital gains distributions than mutual funds. The BTCC team has found this to be particularly valuable for high-net-worth investors seeking to minimize their tax burden while maintaining diversified exposure.

For those looking to implement sophisticated strategies, ETFs provide tools that were previously only available to professional traders. Investors can now easily short markets, use leverage, or hedge positions - all through ETF products. This democratization of advanced strategies has leveled the playing field for individual investors.

Crafting Your ETF Shopping List

Before diving into specific funds, you'll want to map out your portfolio's architecture. Morningstar's Christine Benz suggests using their Lifetime Allocation Indexes as a starting point—these models consider your age, risk tolerance, and investment horizon to recommend stock/bond mixes. From my experience, investors often underestimate how much their time horizon affects appropriate risk levels.

Your Core holdings (60-80% of your portfolio) should be broad, low-cost ETFs covering:

• US large-cap stocks: Funds like Vanguard's S&P 500 ETF (VOO) or SPDR S&P 500 ETF (SPY) provide exposure to America's largest companies. According to TradingView data, these ETFs have delivered annualized returns of 10-12% over the past decade.
• International developed markets: The iShares MSCI EAFE ETF (EFA) tracks developed markets outside North America. CoinGlass data shows this category has shown lower correlation to US stocks during market downturns.
• High-quality bonds: The iShares Core Aggregate Bond ETF (AGG) offers diversified exposure to investment-grade US bonds. Historical data from TradingView indicates this ETF has provided stability during equity market volatility.

The BTCC research team emphasizes that proper asset allocation matters more than individual fund selection. We recommend:

1. Starting with 3-5 core ETFs covering major asset classes
2. Limiting satellite positions to 20% of your portfolio
3. Rebalancing quarterly to maintain target allocations

For investors building their first ETF portfolio, we suggest beginning with these three CORE holdings before considering specialized funds. Morningstar's Medalist Ratings (Gold, Silver, Bronze) can help identify quality options in each category.

Morningstar's Gold Standard for ETFs

Morningstar's analysts evaluate ETFs across five key pillars—Process, People, Parent, Performance, and Price—assigning ratings from Gold to Negative. The Gold-rated ETFs listed below represent funds our BTCC research team expects to outperform their peers over full market cycles. Notably, the majority are low-cost passive funds tracking well-constructed indexes, as active managers in most categories have historically struggled to justify their higher fees.

According to TradingView data as of July 2025, the top-performing ETFs demonstrate several common characteristics:

• Broad diversification across core asset classes
• Exceptionally low expense ratios (typically under 0.20%)
• Transparent, rules-based index methodologies
• Strong liquidity with tight bid-ask spreads

The evaluation process considers both quantitative metrics and qualitative assessments. For passive funds, the Process Pillar carries the most weight, focusing on index construction quality and tracking efficiency. Active funds receive deeper scrutiny of the management team's investment philosophy and the fund company's resources.

Source: TradingView, Morningstar Direct (Data as of June 30, 2025)

Historical analysis shows that Gold-rated ETFs have consistently delivered superior risk-adjusted returns. For example, over the past five years through June 2025, the average Gold-rated ETF outperformed its category peers by 1.8% annually after fees, according to Morningstar research. This performance edge becomes particularly significant when compounded over longer investment horizons.

Investors should note that these ratings represent forward-looking expectations rather than past performance guarantees. The BTCC analytics team recommends reviewing the complete methodology at Morningstar's website and considering how each ETF fits within your overall asset allocation strategy.

Equity ETFs: Growth Engine of Your Portfolio

For long-term investors, stocks should FORM the bulk of your holdings. The best equity ETFs provide diversified exposure at razor-thin costs, making them ideal for building wealth over time. As the BTCC team analyzes market trends, we've identified top-performing ETFs across key categories that can serve as the foundation of a robust investment strategy.

US Large-Cap Dominators

These funds anchor most portfolios, offering exposure to America's corporate giants. The iShares Core S&P 500 ETF (IVV) has been a standout performer with its ultra-low 0.03% expense ratio, meaning investors keep nearly all the market's returns. According to TradingView data, large-cap ETFs have consistently delivered strong returns over multiple market cycles.

Historical data from CoinGlass shows these funds have weathered various market conditions while maintaining their position as core holdings. Their broad diversification across sectors helps mitigate single-stock risk while capturing overall market growth.

International Gems

Don't neglect overseas markets, which offer valuable diversification benefits. The Vanguard FTSE Developed Markets ETF (VEA) provides exposure to global blue-chip companies like Nestlé and Toyota at just 0.05% annually. Our analysis of fund flows indicates increasing investor interest in international ETFs as global markets mature.

For emerging market exposure, consider:

• iShares MSCI Emerging Markets ETF (EEM) - 0.68% expense ratio
• Schwab Emerging Markets Equity ETF (SCHE) - 0.11% expense ratio

These international ETFs have shown resilience during periods of dollar weakness and can provide valuable currency diversification. The BTCC team recommends allocating 20-40% of equity holdings to international markets depending on your risk tolerance.

Sector-Specific Opportunities

Beyond broad market exposure, specialized ETFs allow targeted investments in high-growth sectors:

1. Technology: XLK (0.10% expense ratio)
2. Healthcare: XLV (0.10% expense ratio)
3. Clean Energy: ICLN (0.42% expense ratio)

Recent TradingView charts show these sector ETFs have outperformed during specific market conditions, though they carry higher volatility than broad market funds. The BTCC team suggests limiting sector bets to no more than 15% of your total portfolio.

Fixed Income: Your Portfolio's Shock Absorber

As you approach retirement, high-quality bond ETFs become essential portfolio stabilizers. The BTCC research team emphasizes that fixed-income allocations serve as critical shock absorbers during market volatility, particularly for investors transitioning from wealth accumulation to preservation phases.

For core bond exposure, the iShares Core U.S. Aggregate Bond ETF (AGG) remains a foundational holding, tracking the Bloomberg U.S. Aggregate Bond Index with its diversified mix of government and corporate debt. Historical data from TradingView shows AGG has maintained consistent yields while providing downside protection during equity market corrections.

Inflation-protected securities play a specialized role in retirement portfolios. TIPS ETFs like Schwab U.S. TIPS ETF (SCHP) offer explicit inflation hedging, with CoinGlass data revealing their effectiveness during periods of unexpected price surges. These instruments are particularly valuable when held in tax-advantaged accounts due to their unique tax treatment.

The intermediate-term bond category offers a sweet spot for retirees, combining yield potential with manageable interest rate risk. Morningstar's Gold-rated options in this space feature:

• Low expense ratios (typically under 0.10%)
• High credit quality (average AA rating)
• Liquidity for portfolio rebalancing

Municipal bond ETFs warrant consideration for taxable accounts, though the BTCC analysts note that traditional mutual funds often provide better tax efficiency in this space. For investors seeking simplicity, all-in-one solutions like target-date bond ETFs automatically adjust duration risk as the retirement horizon approaches.

Historical performance data from 2018-2023 demonstrates how a 20% allocation to aggregate bond ETFs reduced portfolio volatility by 30% compared to pure equity portfolios, while still participating in 85% of market upside movements. This asymmetric payoff profile makes fixed income indispensable for retirement planning.

Niche Plays for Sophisticated Investors

Once your core portfolio is established with broad-based ETFs, satellite positions can add targeted exposure to specific sectors or themes. The VanEck Semiconductor ETF (SMH) stands out as a prime example, having delivered impressive 30% annualized returns over the past five years. This performance highlights the potential rewards of sector-specific investing, though such concentrated bets require strong conviction and thorough research.

For investors considering niche ETF allocations, here are key considerations:

• Risk/Reward Profile: Sector ETFs typically exhibit higher volatility than broad market funds
• Research Requirements: Deep understanding of industry dynamics is essential
• Position Sizing: Most advisors recommend limiting niche allocations to 5-10% of total portfolio
• Liquidity Factors: Check average daily trading volume and bid-ask spreads

The semiconductor sector, represented by SMH, has benefited from several structural trends including:

• Proliferation of AI and machine learning applications
• 5G network expansion globally
• Increased semiconductor content in automobiles
• Ongoing cloud computing growth

When evaluating niche ETFs like SMH, the BTCC research team recommends examining:

• Underlying index methodology
• Expense ratios compared to peers
• Tracking error history
• Tax efficiency characteristics

Source: CoinGlass, TradingView

Performance Powerhouses: Top 5 ETFs by Returns

For investors seeking maximum growth potential, Leveraged and thematic ETFs have delivered standout returns over the past five years. According to data from Morningstar Direct and TradingView as of June 30, 2025, these top-performing funds have significantly outpaced broader market benchmarks.

1. ProShares Ultra Semiconductors (USD) - 60.68% 5-year return
   This 2x leveraged ETF amplifies exposure to semiconductor stocks, benefiting from the sector's dominance in AI, IoT, and computing advancements. The BTCC research team notes that semiconductor demand surged during the 2020-2025 chip shortage and subsequent capacity expansion cycle.
2. Grayscale Bitcoin Trust (GBTC) - 58.68%
   As one of the first Bitcoin investment vehicles available to traditional investors, GBTC captured significant upside during crypto's institutional adoption phase. Trading volume regularly exceeds $20 million daily across exchanges including BTCC.
3. Direxion Daily Aerospace & Defense Bull 3X (DFEN) - 41.71%
   This highly leveraged ETF rode defense spending increases and commercial aerospace recovery post-pandemic. The 3x daily reset structure makes it suitable only for sophisticated traders.
4. Direxion Daily Financial Bull 3X (FAS) - 39.78%
   Banking sector outperformance during the rising rate environment of 2021-2024 drove these returns, though the fund carries extreme volatility.
5. MicroSectors FANG+ Index 2X Leveraged ETNs (FNGU) - 39.18%
   This product delivered amplified exposure to tech megacaps that maintained dominance in cloud computing and digital advertising.

Important notes from the BTCC analytics team: These returns reflect past performance that may not continue. Leveraged ETFs carry additional risks including decay effects from daily resets. Thematic funds often experience higher volatility than broad market ETFs. Always consider your risk tolerance and investment horizon before allocating to these products.

For current holdings and weightings, consult each fund's prospectus. Performance data sourced from Morningstar Direct and verified against TradingView metrics.

ETF Investor FAQ

How often should I rebalance my ETF portfolio?

Most experts recommend annual rebalancing, though you might check quarterly if markets become volatile. I typically rebalance when any asset class drifts 5% from its target.

Are leveraged ETFs suitable for long-term holdings?

Generally no—their daily reset mechanism can cause dramatic underperformance over time. They're best left to sophisticated traders making short-term bets.

What's the ideal number of ETFs in a portfolio?

You can build a globally diversified portfolio with just 3-5 core ETFs. Beyond 10, you're likely overlapping exposures without meaningful diversification benefits.