Top 5 ETFs to watch in 2025  

What is an ETF?

An ETF, which stands for exchange-traded fund, is a type of investment vehicle that enables you to track the performance of an underlying set of assets or an index. ETFs are bought and sold on exchanges.

You get different types of ETFs; some cover stocks, whereas others track indices. In this article, we’ve listed a mixture of both.

ETFs can vary in a few ways. Typically, you’ll find:

• Physically replicated ETFs: Buy the underlying asset, such as stocks, which the benchmark tracks
• Synthetically replicated ETFs: Use derivatives to gain exposure to the benchmark and track performance
• Income distribution ETFs: Return dividends to investors
• Accumulated distribution ETFs: Reinvest dividends into the fund
• Smart beta ETFs: Use extra rules in an attempt to outperform their benchmark

Passive vs active ETFs

Passive ETFs are those that track an index, say the S&P 500, and aim to replicate its performance. They hold the same stock in the same proportions as the index.

Active ETFs are managed by professionals who proactively try to outpace the benchmark. They don’t necessarily track an index, and the fees on these are usually higher due to the active management. 

Advantages of ETFs

The pros of ETFs include:

• Diversification: ETFs can provide exposure to multiple industries in one financial vehicle. For example, you might trade an ETF that includes stocks from the automotive, telecommunications and health services industries. ETFs can also invest by country and index
• Accessibility: ETFs provide a relatively low-cost way to gain exposure to different asset classes, investment strategies and markets
• Similar to stock trading: Investing in and trading ETFs is very much like trading stocks in several ways. For example, you trade them at a market-based price that’s updated throughout the day
• Highly liquid: Popular ETFs are often more liquid than stocks, so you shouldn’t have a problem buying or selling them due to a lack of demand or supply

Disadvantages of ETFs

Let’s now look at some of the disadvantages of trading ETFs:

• Costs can be greater than stock trading: You’re looking at commissions and management fees when you invest in actively managed ETFs. Additionally, spreads can be wider on more niche ETFs than they are on stocks
• Lower dividend yields: While you do get dividend stocks in ETFs, they might not necessarily be the highest-yielding ones
• Volatility: ETFs are also vulnerable to volatility, and there’s no guarantee that your investment will grow. However, flip this around for CFD trading, where volatility presents opportunities to profit (or lose)

Top 5 ETFs to watch in 2025

We used several criteria in determining the top five ETFs to watch, including:

• Asset diversification: A balanced mix of exposure to clean energy, short-term futures, and aerospace and defence
• Performance year to date (YTD): Most of these ETFs have all had substantial gains year to date (as of 24 December 2025) for those looking to stock trade. If you’re seeking volatility for CFD trading, you’ll still find it in two of these ETFs because they have seen substantial peaks and retracements
• Political and economic stability: Relatively stable markets

About the ETFs in this article

These ETFs can be traded via CFDs or stock traded with us, except for the Franklin FTSE Eurozone ETF and First Trust Developed Markets ex-US AlphaDEX Fund.

All figures are accurate as of 24 December 2025.

1. Select STOXX Europe Aerospace & Defense ETF (Cboe: EUAD)

Exposure: STOXX Europe Aerospace & Defense Index

YTD performance: 73.27%¹

Suitable for: CFD traders

EUAD tracks the STOXX Europe Aerospace & Defense Index, composed of large- and mid-cap European companies in defence, aerospace and related industrials – think Airbus, BAE Systems, Safran and Rheinmetall.

In 2025, EUAD has delivered impressive YTD returns on the back of elevated defence budgets, renewed geopolitical focus and strong earnings from key manufacturers. This concentration in defence and aerospace naturally produces high volatility, which CFD traders can use to capture sharp intraday and swing price moves linked to macro headlines, contract awards and global risk sentiment.

Europe’s defence sector regularly reacts to policy news – from NATO spending commitments to regional geopolitical tensions – making EUAD an attractive tactical instrument for traders seeking fast-changing price action rather than slow, predictable growth.

Highlights:

• The ETF has net assets totalling over US$1 billion²
• It has 13 holdings and invests at least 80% of its assets in the component securities of the index³

2. ProShares VIX Short-Term Futures ETF (Cboe: VIXY)

Exposure: S&P 500 VIX Short-Term Futures Index

YTD performance: -40.69%⁴

Suitable for: CFD traders

VIXY doesn’t invest in stocks; it tracks the S&P 500 VIX Short-Term Futures Index, a measure of US stock market expected volatility based on front-month VIX futures contracts.

Unlike standard equity ETFs, VIXY rises as fear and expected volatility increase, often when global markets sell off. This makes it a powerful tactical tool for CFD traders looking to profit from sudden corrections, risk-off swings and sharp moves in sentiment, whether driven by macro data, central bank decisions or geopolitical shocks.

Because it’s futures-based, VIXY is best suited for short-term speculation and defensive positioning rather than long holds; the cost of rolling VIX futures can erode value over time. But for nimble traders, it’s a way to trade volatility rather than directional stock moves.

Highlights:

• It has an expense ratio of 0.85%.⁵ This indicates the annual percentage fee taken from your holding to cover the funds operating expenses
• Rolls positions from first-month contracts into second-month contracts on a daily basis

3. iShares Global Clean Energy ETF (Nasdaq: ICLN)

Exposure: S&P Global Clean Energy Index

YTD performance: 44.71%⁶

Suitable for: Stock traders

ICLN tracks the S&P Global Clean Energy Index, which includes global companies involved in clean and renewable energy production and equipment – solar, wind, hydrogen and related technologies.

Clean energy remains a defining structural theme of the decade as countries and corporates decarbonise. ICLN gives UAE stock traders diversified exposure to the global clean energy transition, with holdings spanning North America, Europe and Asia.

In 2025, it has delivered solid YTD returns, reflecting strong tailwinds from policy support, capital investment and accelerating renewable adoption worldwide.

As a thematic ETF, ICLN isn’t about predictable, steady income – it’s about long-term growth through global megatrends. While the sector sees bouts of volatility, its broad coverage softens single-country or single-company risk.

Highlights:

• The ETF screens (removes significant exposure to) a range of business involvements, including controversial weapons, tobacco, thermal coal, shale energy and more⁷
• Its distribution frequency is semi-annually⁸

4. Franklin FTSE Eurozone ETF (NYSE American: FLEU)

Exposure: FTSE Eurozone RIC Capped Index

YTD performance: 38.55%⁹

Suitable for: Stock traders

FLEU tracks the FTSE Eurozone RIC Capped Index, a broad representation of large- and mid-cap companies in the Eurozone economy (France, Germany, Italy, Spain, etc).

Europe’s equity markets have shown renewed strength in 2025, supported by stabilising growth, resilient consumer demand and policy initiatives.

FLEU offers UAE stock traders core exposure to European equities without over-concentration in any single country or sector.

For long-term stock traders, this ETF provides:

• Diversification beyond US and Asian markets
• Exposure to cyclical and defensive sectors across developed Europe
• A base holding that can complement domestic UAE allocations

While FLEU isn’t a high-volatility play, its broad basket helps smooth regional performance swings and serves as a solid international stock position.

Highlights:

• Total net assets equal US$59.56 million¹⁰
• Its gross expense ratio is 0.09%¹¹

5. First Trust Developed Markets ex-US AlphaDEX Fund (Nasdaq: FDT)

Exposure: Uses AlphaDEX developed markets methodology to select and weight stocks from developed countries outside the US

YTD performance: 47.16%¹²

Suitable for: Stock traders

FDT blends growth and value metrics rather than pure market cap.

For stock traders seeking international diversification, FDT offers a quantitative, factor-based approach across Europe, Japan, Canada and Australasia. In 2025 it has outpaced several traditional ex-US ETFs, with solid performance driven by selections that favour quality and momentum metrics.

This smart-beta structure can help UAE investors tilt portfolios toward stocks with stronger fundamentals while still capturing broad developed-market exposure. Unlike region-specific ETFs, FDT wraps multiple developed economies into one instrument, providing a balanced international product to complement multiple market holdings.

Highlights:

• Its largest sector weightings include industrials, basic materials, consumer cycle, financial services, energy and technology¹³

How to trade ETFs with IG UAE

CFDs

1. Open a CFD trading account with IG UAE
2. Search for ETFs on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it 

Stock trading

1. Open a stock trading account with IG UAE
2. Search for ETFs
3. Choose the ETF you want to buy
4. Determine how many units you want to purchase
5. Place your order
6. Monitor your investment 

FAQs about ETFs

Footnotes
 

1. TradingView, December 2025
2. Select Funds, December 2025
3. Select Funds, December 2025
4. TradingView, December 2025
5. Pro Shares, September 2025
6. TradingView, December 2025
7. iShares, December 2025
8. iShares, December 2025
9. TradingView, December 2025
10. Franklin, December 2025
11. Franklin, December 2025
12. TradingView, December 2025
13. Yahoo! Finance, December 2025