The Best ETFs to Buy for 2026 and Beyond

The exchange-traded fund industry is in a full boom right now. According to ETF Central, a platform that tracks ETF markets and issuer data, there were nearly 4,780 U.S.-listed ETFs as of December 4. That is explosive growth compared with January 22, 1996, when the first U.S.-listed ETF, the SPDR S&P 500 Trust (SPY), launched and kicked off the modern exchange-traded-fund era.

The expansion has reached a point where U.S.-listed ETFs now outnumber individual stocks, according to Bloomberg. A great example is Strategy (MSTR), the software company turned bitcoin treasury formerly known as MicroStrategy. If you search for MSTR in most brokerage apps, you will find dozens of ETFs offering leveraged, inverse or income-oriented exposure to the stock. That level of proliferation speaks to how deeply ETFs have saturated every corner of the market.

It also reflects a broader trend. ETF issuers are increasingly catering to Gen Z's appetite for high beta and yield-focused strategies, often built with derivatives or concentrated exposures.

Yet it helps to step back and remember why ETFs became popular in the first place. The core appeal is transparency, liquidity and tax efficiency. Keeping these traits in mind is essential when deciding the best ETFs to include in a long-term portfolio.

Why buy ETFs?

Compared with other fund types such as mutual funds and closed-end funds (CEFs), ETFs have grown far faster and have taken in steady inflows for years.

A big reason is structural. ETFs solved several problems that plagued both mutual funds and CEFs, and they did it through the in-kind creation and redemption process.

Mutual funds are open-ended, which means the fund company creates or cancels shares based on investor demand. The challenge is capital gains distributions. In a high-turnover mutual fund, or one that realizes gains and losses throughout the year, investors can receive a capital gains tax bill even if they never sold their own shares.

The buying and selling activity of other investors, along with portfolio rebalancing by the manager, forces the fund to realize gains that get passed through to every shareholder. This is why many mutual fund investors get hit with taxable distributions at the end of December despite doing nothing.

ETFs avoid this issue because the fund manager does not create new shares. Instead, authorized participants work directly with the ETF issuer to create or redeem shares using a basket of the underlying securities. This is called creation and redemption in kind and keeps the buying and selling activity outside the fund, preventing the realization of taxable gains within the ETF itself.

CEFs have a different issue. They are publicly traded funds, but they have a fixed pool of shares. As a result, the market price can trade above or below the value of the underlying holdings. A price above the net asset value is a premium, and a price below is a discount.

For investors, this means the entry point is not always intuitive. A good CEF can trade at a steep premium, while a struggling CEF can trade at a discount for years. ETFs solved this by allowing arbitrage between the market price and the net asset value.

If the ETF trades above its underlying value, an authorized participant can deliver the underlying basket, receive ETF shares and sell them for a quick profit. If the ETF trades below its underlying value, the process reverses. These arbitrage incentives keep ETF prices close to their net asset values and prevent persistent premiums or discounts.

There are also practical benefits. ETFs offer greater liquidity and usually trade with much narrower bid-ask spreads than CEFs. Unlike mutual funds, which are priced once after the market closes, exchange-traded funds trade throughout the day like stocks. Most ETFs also disclose their full portfolios daily, while mutual funds typically report only a handful of times per year.

Given the number of ETFs now available across every asset class, geography and strategy, it is easy for investors to get lost in the sheer variety. It helps to step back and remember the mechanics that made ETFs popular in the first place, and to use those traits as a foundation when deciding which ones are worth owning.

How we picked the best ETFs to buy for 2026 and beyond

There is no clean or perfectly objective way to determine which five ETFs are the "best" out of nearly 4,780 options. Focusing on a single metric would create a lopsided and unfair list.

For example, we could simply choose the five largest ETFs by assets under management, but that would reflect factors such as time in the market rather than inherent quality. SPY has had almost three decades to grow, and the largest issuers, including Vanguard, iShares, State Street and Invesco, have enormous marketing budgets that help keep their flagship ETFs in front of investors.

Ranking solely by historical returns has similar problems. ETFs do not share common inception dates, and results are heavily dependent on rolling periods. An ETF that shines over the last decade may look much weaker if the start or end date changes slightly. More importantly, past returns do not predict future performance, especially when market leadership rotates.

To keep the process fair, we selected one ETF that represents the "best in class" for its category. We chose five broad asset classes that nearly every investor encounters: equities, fixed income, commodities, cryptocurrency and multi-asset. The goal was to highlight ETFs with structural traits that make them durable buy-and-hold candidates rather than temporary fads.

From there, we relied on a universal attribute that Morningstar and other research firms have repeatedly identified as the single most reliable predictor of fund returns: fees. An ETF's expense ratio is deducted from the fund's assets throughout the year. You do not pay it out of pocket, but it reduces your net returns every day. Over long stretches, this drag compounds, which is why low-cost funds consistently outperform more expensive peers with similar strategies.

Asset managers understand this. Over the past decade, fee compression has been one of the most important trends in the industry. ETF issuers have either held expenses flat or cut them to remain competitive, benefiting investors and reshaping competition across categories.

For each best-in-class pick, we also emphasized ETFs with robust assets under management for longevity and scale, and low bid-ask spreads to ensure efficient trading for investors of all sizes.