Top Trends for 2024:identifying the ETFs promising highest yields
Investors are increasingly turning to thematic Exchange-Traded Funds (ETFs) as they seek to capitalise on the ongoing megatrends shaping the global market. These themes, which prominently include artificial intelligence (AI), defense, electrification, thematic innovation around disruptive technologies, and alternative liquid investment strategies, continue to offer promising opportunities for potential investors in 2025.
Artificial Intelligence (AI)
Artificial Intelligence (AI) remains a dominant and highly growth-oriented theme. AI ETFs focus on companies leading AI innovation across infrastructure, software, healthcare, finance, and transport sectors. The surge in global AI spending—expected to grow by 60% to $360 billion this year—reflects its strong growth potential and broadening industry impact. This makes AI-themed ETFs among the most popular and profitable thematic investments currently available.
A good example of an AI-focused thematic ETF is the Xtrackers Artificial Intelligence and Big Data UCITS ETF (WKN: A2N6LC).
Defense
Defense ETFs are gaining traction, especially in Europe, driven by increasing government spending and NATO commitments to raise defense budgets to 5% of GDP by 2035. New defense-focused ETFs have attracted billions in net new money in early 2025, indicating strong investor interest in this sector as a megatrend.
Clean Energy
Clean energy ETFs remain significant thematic categories, though they have recently faced some headwinds, including net outflows caused by higher interest rates, regulatory uncertainty, and shifts in investor sentiment post-pandemic. While still important from a long-term infrastructure perspective, clean energy is currently less favored near term compared to AI and defense ETFs.
Liquid Alternative ETFs
Liquid alternative ETFs, such as those offering derivative income and defined outcome strategies, are growing rapidly due to their tax efficiency and income features. These ETFs appeal to investors seeking diversification beyond traditional equity and fixed income portfolios and protection against inflation.
Active ETFs and Private Markets
Active ETFs and private markets are emerging as critical growth areas within the broader ETF ecosystem. Investors are increasingly demanding active management and access to private market investments through the ETF wrapper, combining liquidity with innovative exposure.
Regarding the overall promise of these megatrends for investors, AI and defense ETFs are especially strong opportunities due to robust growth drivers and government backing. Meanwhile, clean energy might require cautious navigation because of recent volatility and policy uncertainty. The growth of liquid alternatives and active/private market ETFs suggests investors are seeking more tailored and sophisticated investment vehicles to complement thematic exposures.
Investing in thematic ETFs can potentially provide higher returns compared to traditional investment methods, as they focus on specific sectors or themes. However, it's essential for investors to exercise caution and analyze before betting on trend ETFs, as the depreciation in price of former megatrends serves as a reminder of the potential risks associated with trend ETFs.
The Global X Uranium UCITS ETF (WKN: A3DC8S) is a thematic ETF that focuses on the uranium sector, while the First Trust Nasdaq Clean Edge Smart Grid Infrastructure UCITS ETF (WKN: A3DGK5) is an investment option for those interested in power grid megatrends. Investors are particularly interested in megatrends related to Artificial Intelligence (AI) and power grids.
In summary, these megatrends reflect structural shifts in technology, geopolitics, and investor preferences as of mid-2025 and are likely to remain key areas of ETF innovation and opportunity for potential investors in the near future.
Artificial Intelligence (AI) ETFs, focusing on companies leading innovation in various sectors such as infrastructure, finance, and transport, continue to attract significant attention due to the projected 60% growth in global AI spending and its broadening industry impact.
Defense ETFs are gaining popularity, particularly in Europe, as a result of increasing government spending and NATO commitments to boost defense budgets, making them a promising megatrend for potential investors in 2025.
