ETFs to Watch in 2026

Episode Summary

Executive Summary: The episode is a year-ahead ETF idea roundtable for 2026, with Bloomberg Intelligence analysts and the hosts each pitching niche or thematic funds they think may matter. Picks span active bond income, R&D spending, international and Latin America exposure, leveraged single-stock risk, crypto indexes, private equity access, tax-efficient cash, buffers, cannabis, housing, managed futures, and speculative UFO-related themes.

Main Topics: 2026 ETF idea roundup (Priority: 5/5): The hosts frame the episode as an annual tradition of spotlighting tickers and product trends that may attract flows or define the next year in ETF land. Active bond income and fixed-income innovation (Priority: 5/5): Eric highlights BINC, arguing active bond ETFs are gaining institutional and retail acceptance because they can beat benchmarks with lower volatility and strong inflows. Factor/theme ETFs tied to corporate spending and international exposure (Priority: 4/5): Athanasios and James debate LRD (R&D spend), VXUS (international equities), and OTGL (Latin America), emphasizing valuation, policy shifts, and diversification. Speculative and structurally risky products (Priority: 4/5): The discussion covers leveraged single-stock ETFs like PXIU and ultra-speculative ideas like UFOD, with the speakers noting both the demand for extreme products and the possibility of blowups. Private market, tax, and alternative strategies in ETFs (Priority: 5/5): XOVR, BOXX, GRIFT, BUFB, and DBMF illustrate the industry's push into private equity exposure, tax optimization, political-trading themes, buffered products, and managed futures. Sector callouts: cannabis and housing (Priority: 3/5): MSOS and ITB are pitched as contrarian plays on regulatory reform and rate-sensitive housing, respectively, with each seen as a sentiment-sensitive barometer.

Key Arguments: Active bond ETFs are increasingly preferred because investors want better yields and lower volatility than traditional bond index exposure. Companies that spend more on R&D may be rewarded by markets, making LRD a way to own innovation spending rather than just dividends or buybacks. International equities are not necessarily a broad secular call, but flows and performance can shift when U.S. stocks lag and diversification becomes attractive. Latin America may benefit from pro-business political shifts, especially in Argentina, Chile, and possibly Brazil, making a targeted regional ETF interesting. Leveraged single-stock ETFs are so aggressive that one may eventually blow up, making PXIU more of a warning sign than a recommendation. Crypto index ETFs excluding Bitcoin could grow because investors want broader digital-asset exposure without duplicating BTC holdings. Private equity exposure inside an ETF is showing real demand, unlike some private credit launches, and XOVR may be the proof of concept. Tax-aware products like BOXX succeed because they transform treasury-like returns into more favorable capital-gains treatment for investors. Buffered/laddered downside-protection ETFs are becoming mainstream enough that even non-professional investors are asking about them. Managed futures remain an important diversifier to own before a crisis, not after volatility hits. Speculative thematic ETFs like UFOD reflect how far the ETF wrapper can stretch into niche or satirical areas if there is a story and a tradable basket.

Data Points: BINC assets: $15 billion - Eric says iShares Flexible Income ETF is the fastest-growing active ETF ever. BINC fee: 40 bps - Cost cited for the active bond ETF. BINC inception: May 2023 - Used to frame how quickly the fund accumulated assets. Active equity mutual fund flows: over $1 trillion in outflows - Eric contrasts weak demand for stock pickers with stronger demand for active bonds. LRD fee: 14 bps - Very low-cost R&D-spending strategy ETF. LRD launch year: 2022 - Athanasios notes it is a newer niche product with limited assets. VXUS 2025 performance edge: outperformed the S&P 500 by about 13% - James cites this as the reason international is worth watching. VXUS inflows: about $17 billion - Used to show strong investor interest in international stocks. VXUS launch and flow history: launched in 2011; had only four outflow days - James emphasizes the persistence of inflows. OTGL country weights: Argentina 2%, Chile 11%, Brazil 43% - Eric uses these weights to explain why the Latin America ETF is notable. OTGL regional catalyst: Argentina up about 200%; Chile about 60% - Examples of market reaction to right-leaning political shifts. PXIU market cap: $136 million - Eric highlights how tiny the underlying company is for a 2x leveraged ETF. PXIU volatility: 215% - Used to underscore blowup risk in leveraged single-stock products. TXBC assets: more than $1 billion - James says the crypto index ETF has very low/early assets but the category is growing. XOVR assets: $700 million - Eric cites strong demand after adding private equity exposure and SpaceX. Private equity allocation in XOVR: up to 15% illiquid investments - Describes the fund’s ability to include private assets. BOXX product size: almost $10 billion - James points to it as a major tax-efficient cash management success. BOXX inflation-like return stream: 15% - Discussion focused on how price return and total return can differ versus Treasury-like holdings. BUFB buffer: 9% buffered - Eric says the laddered buffer product protects against roughly a 9% market decline. PCLN fee: 70 bps - Ethan criticizes the ESG cleaner-planet ETF as expensive for a weakly differentiated strategy. SPYM assets: $101 billion - James notes it as a huge, low-fee S&P 500 product. SPYM inflows: $35 billion - Illustrates strong fund flows into the cheap S&P 500 clone. SPYM fee: 2 bps - A key reason the fund is siphoning assets. MSOS performance after rumor: up 50% in a day - Eric cites a regulatory rumor as a major catalyst for cannabis stocks. MSOS drawdown: down over 80% - Shows how beaten down the cannabis ETF remains despite occasional spikes. ITB performance: flat in 2025 versus 17% for the S&P 500 - Ethan calls homebuilders a sentiment barometer tied to rates and affordability. DBMF assets: $2 billion - James highlights managed futures as a diversifier that has scaled meaningfully.

Pivotal Quotes: "People just like tickers, Joel." — Eric: Explaining why the annual feature is organized around specific ETF symbols rather than broad trends. "This is like the Silicon Valley of the investing world." — Eric: Describing ETF culture as highly gadget-oriented and ticker-driven. "Today's satire is tomorrow's ETF." — Eric: Said about speculative products like UFOD, capturing the industry's tendency to monetize absurd-seeming themes.

Implications: The ETF industry is pushing further into cheaper beta, tax engineering, private-market access, and ultra-niche themes. For investors, the challenge is separating durable innovation from gimmicks while watching where flows and behavior actually concentrate.