ETF News

Thematic ETFs offer investors distinct market exposures, enabling them to benefit from macroeconomic, sector, and social trends poised for strong, long-term performance. While the ‘non-U.S.’ equities trade was generally advantageous to investors in 2025, certain market exposures performed exceptionally well throughout the year and could continue their run in 2026. This article will highlight some of these market exposures and ETFs that provide exposure to them.

Theme: Defense

Against the backdrop of growing geopolitical uncertainty, firms operating in the defense and munitions sector are top-of-mind beneficiaries of the current market environment. As mentioned in an article published last year, President Trump has pushed for European NATO members to increase their military spending in a material way. As a result of this prompting, the European Union Council established the Security Action for Europe (SAFE) instrument, a 150-billion-euro rearmament fund announced in May 2025, which aims to aid member states in defence industrial production through common procurement, focusing on priority capabilities.

Most notably, SAFE is not limited to EU members; Canada has joined the initiative, and countries that have signed a Security and Defence Partnership with the EU, such as the United Kingdom, can also join.  Ultimately, defense spending is poised to continue increasing in 2026, as such, this is an sector that investors may take keen interest in going forward.

In 2025, the performance of the European defense sector was notably strong, as the MSCI Europe Aerospace & Defense Index returned approximately 77% for the year. While there are no turnkey ETFs that provide pure-play exposure to the European defense market, solutions such as the Global X Defence Tech Index ETF (Ticker: SHLD) do offer global exposure to companies involved in the development of advanced military systems, technology, and hardware development, spanning key markets across Europe, North America, and Asia.

It should be noted that SHLD has less than one year of performance; however, its U.S. counterpart provides insight into its long-run performance. Alternatively, investors can look to the iShares U.S. Aerospace & Defense Index ETF (Ticker: XAD), which has broad exposure to the defense and munitions industry; and has been a long-standing option for Canadian investors wanting to be exposed to the defense sector.

Theme: Precious Metals

In times of uncertainty, investors seek safe-haven assets, and gold is at the top of the list. While the asset class was the top performer in 2025, the market conditions that enabled this success are largely in place for 2026, as geopolitical and economic uncertainty, a weaker US dollar, and positive price momentum remain factors to consider in the new year.

As captured in the World Gold Council’s 2026 outlook, the price of gold will be predicated on the state of the economic environment, in that, if economic growth slows and interest rates fall further, gold could see moderate gains. In a more severe downturn marked by rising global risks, gold could perform strongly. Conversely, a successful outcome from policies set by the Trump administration would accelerate economic growth and reduce geopolitical risk, leading to higher rates and a stronger US dollar, pushing gold lower. Additional factors, such as central bank demand and gold recycling trends, could also influence the market. Most importantly, gold’s role as a portfolio diversifier and source of stability remains key amid continued market volatility.

As seen in 2025, gold's strong performance has influenced silver and platinum prices, leading to strong returns for the year. Specifically regarding silver, while it is also a store of value and a safe-haven asset, it also has industrial uses—such as in circuit boards, switches, electric vehicles, batteries, and solar panels—which add to its value proposition.

For Canadian investors seeking a solution that provides cross-sectional precious metal exposure, the RBC Global Precious Metal Fund (Ticker: RGPM) is an actively managed fund that primarily invests in equity securities of companies worldwide involved directly or indirectly in the exploration, mining, and production of precious metals, including gold, silver, and platinum. As such, RGPM is a turnkey solution that allows investors to gain exposure to precious metals in a single-ticket solution.

Theme: Artificial Intelligence

Artificial Intelligence remains a prevailing theme in 2026 and is likely to remain a mainstay in the coming years, given the increasing capital expenditures of AI hyperscalers, namely, Alphabet, Amazon, Meta, Microsoft, and Oracle. While 2025 saw a momentary shift in sentiment around adoption, with a growing narrative of an ‘AI Bubble’, there is supportive evidence of ongoing AI adoption across the business landscape. Thus, investments into AI development and adoptions will continue in the years ahead, making it a long-tailed investment theme that investors should be cognizant of.

For Canadian investors seeking turnkey exposure to firms within the AI ecosystem, Global X’s Artificial Intelligence Semiconductor Index ETF (Ticker: CHPS) and Artificial Intelligence & Technology Index ETF (Ticker: AIGO) are worth considering. The former provides direct exposure to some of the largest global semiconductor companies. The latter reflects companies that are positioned to benefit from the development and use of artificial intelligence in their products and services, as well as companies that produce hardware used in AI applications for the analysis of big data.

Alternatively, investors can also consider the Invesco Morningstar Global Next Gen AI Index ETF (Tickers: INAI/INAI.F), a passively managed solution that reflects the performance of the Morningstar® Global Next Generation Artificial Intelligence Index™, which is comprised of companies anticipated to have significant economic benefits due to their role in the advancement of artificial intelligence technologies.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.