Top 10 Best‑Performing Smart Beta ETFs in 2025
Smart Beta ETFs occupy a middle ground between traditional passive funds and active management.
These funds use factor‑based rules, such as value, momentum, quality, dividends, and low volatility, to weight holdings in ways that seek better risk‑adjusted returns than a standard market‑cap index fund. Unlike a simple S&P 500 tracker, smart beta strategies can tilt a portfolio toward specific drivers of performance that have historically rewarded investors in certain market environments.
While complete performance rankings specifically for smart beta ETFs in 2025 are not published in a dedicated leaderboard, many well‑known factor‑based funds traditionally shine in years of market rotation or volatility. Funds that capture momentum, quality, dividend yield or value often stand out against plain index trackers.
Below is a representative list of widely followed smart beta ETFs that typically feature among top performers or popular factor‑based strategies in recent markets, including insights into performance drivers, major providers and where you can buy them:
| Rank | ETF (Ticker) | 2025 Est. Return | Provider | Where to Buy | Factor/Strategy |
|---|---|---|---|---|---|
| 1 | Vanguard Value ETF (VTV) | ~20–30% est. | Vanguard | Most brokers (Fidelity, Schwab, IB) | Value factor (undervalued stocks) (Saxo) |
| 2 | iShares Russell 1000 Growth ETF (IWF) | ~25–35% est. | BlackRock iShares | Standard brokers | Growth factor (fast earnings/growth) |
| 3 | Vanguard Dividend Appreciation ETF (VIG) | ~15–25% est. | Vanguard | Globally via US brokers | Dividend factor (quality/steady payouts) |
| 4 | Invesco S&P 500 Equal Weight ETF (RSP) | ~15–28% est. | Invesco | US listings (Interactive Brokers, E*TRADE) | Equal weighting (balanced exposure) (Saxo) |
| 5 | iShares MSCI USA Momentum Factor ETF (MTUM) | ~20–30% est. | BlackRock iShares | All major online brokers | Momentum factor (price trend strength) (IG) |
| 6 | FlexShares Quality Dividend Index Fund (QDF) | ~18–27% est. | Northern Trust | Major brokers | Quality & dividend focus |
| 7 | First Trust Large Cap Value AlphaDEX Fund (FTA) | ~15–26% est. | First Trust | US equity brokers | Factor mix (value/alpha) |
| 8 | iShares Edge MSCI USA Minimum Volatility ETF (USMV) | ~10–22% est. | BlackRock iShares | Widely accessible | Low volatility factor |
| 9 | Vanguard High Dividend Yield ETF (VYM) | ~12–23% est. | Vanguard | All US brokers | High‑yield dividend factor (Saxo) |
| 10 | Schwab Fundamental U.S. Broad Market Index ETF (FNDB) | ~14–24% est. | Charles Schwab | Schwab, Fidelity, IB | Fundamental weighting (earnings/size) |
Takeway from Fundavia
Looking back on 2025, smart beta ETFs showed once again that they are more than just another label in the ETF universe. Factor‑based strategies such as momentum, high dividend and multifactor tilts outperformed broad market averages at various points during the year, drawing fresh investor interest as traditional market‑cap strategies took a breather while flows shifted toward more tailored exposures. Momentum in particular stood out as a force in 2025, with momentum‑oriented funds significantly outpacing many other factors and broad benchmarks, a sign that markets were rewarding trends over static stock weights through much of the year.
Looking to 2026, many market watchers see smart beta ETFs continuing to matter in portfolios as investors seek more nuanced equity exposures than plain index trackers can offer. Recent research suggests that valuations in some factor segments now look more attractive than they have in years, raising the possibility that factor‑tilted strategies could benefit if market conditions align.
Meanwhile, flows into smart beta products have been growing, signalling that advisers and allocators are increasingly comfortable blending passive and factor‑oriented tilts into diversified portfolios.
Of course, the road ahead carries the familiar caveat that timing matters in factor investing. The performance of smart beta strategies tends to ebb and flow with broader market regimes, and no single factor is guaranteed to lead every cycle. But as markets navigate the economic and geopolitical currents of 2026, smart beta ETFs are likely to remain a useful tool for investors seeking targeted exposures, risk‑managed alternatives and a little extra nuance beyond simple index tracking, especially for those prepared to view them as strategic long‑term building blocks rather than short‑term bets.
