The market temperature for risk may be shifting, with markets back in positive territory for the year after some positive news on the tariff front. But year to date, clearly there have been three themes that have dominated from a performance perspective: gold, defense, and Europe.
Gold Has Been Glittering
Gold prices have been rising due to a confluence of factors. Those include geopolitical risk and the increased demand for safe-haven assets amid tariff and trade uncertainty. Gold is historically considered a safe-haven asset in times of market uncertainty and volatility. Foreign banks are also diversifying their reserves to reduce their reliance on the US dollar and “de-dollarize.”
Inflation concerns also remain top of mind. Gold, along with other commodity assets, is often viewed as a hedge against inflation. These tailwinds have all contributed to strong performance for gold mining ETFs, which are leveraged to higher gold prices and market demand.
At the top of the performance list are the levered gold mining ETFs and ETNs.
The MicroSectors Gold Miners 3X Leveraged ETN (GDXU) is up a whopping 156% YTD, and assets under management have climbed to $579 million. Direxion has two 2X ETFs participating in the gold miners bull market surge as well: the Direxion Daily Gold Miners Index Bull 2X Shares (NUGT) and the Direxion Daily Junior Gold Miners Index Bull 2X Shares (JNUG), up 104% and 108% respectively.
| Symbol | ETF Name | Total Assets | YTD | ER |
| GDXU | MicroSectors Gold Miners 3X Leveraged ETN | $579,091,000 | 156.29% | 0.95% |
| JNUG | Direxion Daily Junior Gold Miners Index Bull 2x Shares | $290,278,000 | 108.83% | 1.02% |
| NUGT | Direxion Daily Gold Miners Index Bull 2x Shares | $539,942,000 | 103.92% | 1.13% |
| AUMI | Themes Gold Miners ETF | $9,857,230 | 57.05% | 0.35% |
| SGDM | Sprott Gold Miners ETF | $384,143,000 | 54.90% | 0.50% |
| GOEX | Global X Gold Explorers ETF | $61,268,000 | 52.83% | 0.65% |
| GDXJ | VanEck Junior Gold Miners ETF | $5,240,520,000 | 52.80% | 0.51% |
| GOAU | US Global GO GOLD and Precious Metal Miners ETF | $121,083,000 | 52.23% | 0.60% |
| RING | iShares MSCI Global Gold Miners ETF | $1,469,750,000 | 50.52% | 0.39% |
| GDX | VanEck Gold Miners ETF | $15,487,500,000 | 49.37% | 0.51% |
| SGDJ | Sprott Junior Gold Miners ETF | $165,429,000 | 47.68% | 0.50% |
Source: ETFdb as of 6/2/25
Defense is Defensive
Another defensive play among geopolitical uncertainty has been defense, no pun intended. Defense companies are also benefiting from increased defense spending and realignment in Europe and defense budget re-prioritization in the U.S. Legacy equipment and systems are being replaced by new technologies such as AI and drones in a shift toward modern defense capabilities.
| Symbol | ETF Name | Total Assets | YTD | ER |
| EUAD | Select STOXX Europe Aerospace & Defense ETF | $1,066,980,000 | 67.20% | 0.50% |
| DFEN | Direxion Daily Aerospace & Defense Bull 3X Shares | $222,716,000 | 58.37% | 0.95% |
| SHLD | Global X Defense Tech ETF | $2,548,240,000 | 52.47% | 0.50% |
| NATO | Themes Transatlantic Defense ETF | $24,427,000 | 32.46% | 0.35% |
| ITA | iShares U.S. Aerospace & Defense ETF | $7,488,390,000 | 22.14% | 0.40% |
| PPA | Invesco Aerospace & Defense ETF | $5,248,330,000 | 16.35% | 0.58% |
| XAR | SPDR S&P Aerospace & Defense ETF | $3,146,870,000 | 15.49% | 0.35% |
| MISL | First Trust Indxx Aerospace & Defense ETF | $140,860,000 | 13.59% | 0.60% |
| WAR | U.S. Global Technology and Aerospace & Defense | $4,472,840 | 12.84% | 0.60% |
| ARKX | ARK Space Exploration & Innovation ETF | $290,587,000 | 6.92% | 0.75% |
| FITE | SPDR S&P Kensho Future Security ETF | $68,193,300 | 3.30% | 0.45% |
Source: ETFdb as of 6/2/25
Among non-levered ETFs, the Select STOXX Europe Aerospace & Defense ETF (EUAD) leaders in terms of performance, thanks to its European focus, up 67.2% YTD. The Global X Defense Tech ETF (SHLD), which has a forward-looking, future of technology focus, has also been a performance leader, up 52.5% YTD.
European Renaissance
The investment case for Europe has become increasingly more positive. Fiscal stimulus plans and deregulation efforts are fueling an economic recovery in the region. Inflation has been easing in Europe, resulting in interest rate cuts. Additionally, many European companies are at attractive valuations relative to U.S. peers.
These factors are contributing to strong investment returns in European ETFs and there has been a surge of inflows. Sectors such as European defense, infrastructure, and renewables have been key drivers of performance. European ETFs saw record inflows in Q1 2025 of $10.6 billion, representing seven times the flows seen in 2024 and the sharpest turnaround in inflows since February 2022.
The iShares MSCI Poland ETF (EPOL), up 45.5%; the First Trust Germany AlphaDex Fund (FGM), up 42.6%; the iShares MSCI Spain ETF (EWP), up 39.4%; and the iShares MSCI Austria ETF (EWO), up 38.4%, are all YTD performance leaders among country ETFs. The top diversified European ETF YTD is the First Trust STOXX European Select Dividend Index Fund (FDD). It is up 35.7% for the year, and the ETF also has an attractive 12-month dividend yield of 5.89%.
Will the new risk-on appetite prevail, or will there be more macro-related market setbacks? Only time will tell, but in terms of this year’s past performance, gold, defense, and Europe remain market leaders for the year.
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