The ETF Themes to Watch in 2026

Active ETFs, Leveraged Stocks, and Thematic Investing: A 2026 Outlook

Key Concepts:

• Active ETFs: Exchange Traded Funds managed with a specific investment strategy aiming to outperform a benchmark.
• Leveraged Single Stock ETFs: ETFs designed to multiply the daily returns of a single stock, carrying high risk.
• Thematic ETFs: ETFs focused on investing in companies related to a specific theme or trend (e.g., Quantum Computing, AI, 6G).
• Quantum Computing: A rapidly developing field utilizing quantum mechanics to solve complex problems.
• AI Debt Deluge: The increasing issuance of debt to finance Artificial Intelligence development and infrastructure.
• Volatility Score: A measure of the price fluctuations of an asset, indicating its risk level.
• Lazarus List: (Bloomberg Intelligence term) ETFs that experience little to no activity for a period, then suddenly see a surge in interest.

I. Growth and Evolution of Active & Leveraged ETFs (2025 & 2026)

The discussion centers on the significant growth experienced by active ETFs, particularly leveraged single stock ETFs, in recent years, including 2025. Billions of dollars in assets have flowed into these funds. This growth is attributed to a shift away from purely passive investment strategies and a demand for innovation, specifically in single-name levered stocks and options-based products offering income.

Katie, representing an ETF issuer (Defiance), anticipates continued growth in 2026, driven by new and exciting single-name leveraged stock offerings, particularly those tied to emerging themes like quantum computing and the “picks and shovels” of AI. She also expects the emergence of new thematic ETFs, evolving from current popular themes like quantum and infrastructure, to encompass advancements in technology. Investor comfort with ETFs is expected to continue increasing.

II. Single Stock ETF Strategy & Due Diligence

The issuer acknowledges the inherent risk in managing a portfolio of single stock ETFs. While some names will achieve significant popularity, others may not. The strategy isn’t about guaranteed success with every launch, but rather about achieving enough “hits” to offset less successful products.

A rigorous due diligence process is employed before launching new ETFs. This includes analyzing data, volatility scores, social media interest, institutional client interest, and general media coverage. Despite this, the issuer recognizes that some products may initially underperform, but can experience a resurgence in popularity after a period of time – referencing a “Lazarus list” maintained by Bloomberg Intelligence of ETFs that unexpectedly recover. The key is to adapt and focus on capturing emerging trends.

III. Fixed Income Thematic ETFs & Emerging Themes

The conversation explores the potential for fixed income thematic ETFs, particularly in light of the “AI debt deluge” – the increasing debt issuance to fund AI development. While acknowledging potential opportunities, the issuer also highlights the concentration risk already present in the AI ETF space.

A significant emerging theme discussed is the focus on secure AI development, spurred by a recent announcement from the Trump administration prioritizing research and investment in this area. This ties into existing ETFs like the issuer’s 6G ETF, which is gaining relevance due to the infrastructure requirements of AI and quantum computing. The speaker notes the evolution of themes, referencing the shift from 5G to 6G as technology advances.

IV. Quantum ETF (QTU) – Performance & Long-Term Outlook

The Quantum ETF (QTU) experienced substantial inflows throughout 2025, particularly from mid-summer onwards. The issuer attributes this to increasing “proof points” of commercialization in the quantum computing space. Examples cited include bond pricing applications by HSBC, and investments from major tech companies like IBM, Cisco, Oracle, and those within the “Magnificent Seven” (and beyond).

The issuer emphasizes a long-term investment horizon for the Quantum ETF, comparing the technology’s development stage to a toddler still learning to walk, contrasting it with AI which is described as being at a “toddler” stage. They believe investors understand this long-term nature and are committed to holding the ETF for the long run. Socialization of the quantum concept is still in its early stages.

V. Investor Profile & Risk Tolerance

The investor base is a mix of both retail and institutional clients, but with differing risk profiles. Investors in thematic products (like Quantum) tend to be long-term, conservative, and focused on portfolio allocation. Those investing in leveraged single stock ETFs are described as more sophisticated traders who understand the short-term, high-risk nature of these products and are prepared to trade them actively. The issuer stresses the importance of understanding the risks associated with leveraged ETFs, using the phrase “user beware.”

Notable Quotes:

• “We view this as a long term investment and in the last year, I think the reason that we've seen so much interest…is because you've started to get these proof points of reality and commercialization.” – Katie, on the Quantum ETF.
• “A.I. is maybe a toddler, quantum is still just learning to crawl.” – Katie, illustrating the differing stages of development between AI and Quantum Computing.
• “Clients that are in the single name stocks…it’s a sophisticated trader who understands that these are meant to be traded and not held.” – Katie, describing the investor profile for leveraged single stock ETFs.

Conclusion:

The conversation highlights a dynamic landscape in the ETF market, characterized by growing investor interest in active strategies, particularly those focused on emerging themes like quantum computing and AI. Success in this space requires rigorous due diligence, a long-term investment perspective, and a clear understanding of the differing risk profiles of investors. The issuer anticipates continued innovation and evolution in the ETF space, with new thematic offerings and a focus on capturing the next wave of technological advancements.