Which ETFs Have the Highest Return on Investment? (w/Examples) + FAQs

Exchange-traded funds deliver substantial returns when you select the right ones for your goals. The highest-performing ETFs from 2020 to 2025 include leveraged technology funds generating over 28% annualized returns, while broad market ETFs deliver steady 8-13% annual gains. Understanding the differences between ETF types, risk levels, and cost structures lets you make smart investment choices that match your financial situation.

What You’ll Learn From This Article

🎯 The specific ETFs earning the highest returns plus real examples showing your money at work

📊 Why some ETFs earn 28% per year while others return just 3%, and what creates these differences

⚠️ The dangers of overlooking tax treatment and regulations when chasing high returns

🛡️ How to balance strong performance with appropriate risk levels for your investment timeline

💰 Concrete strategies to select the best ETFs for your unique financial goals without making costly mistakes

Understanding Exchange-Traded Funds and Performance

An ETF is an investment fund that trades on stock exchanges like regular stocks, but holds a basket of assets inside it. ETFs must register with the SEC as open-end investment companies, meaning they follow strict disclosure and transparency rules. When you buy ETF shares, you own a piece of multiple stocks, bonds, or other assets without buying them individually.

ETFs differ from mutual funds in important ways that affect your returns and tax bills. ETFs trade throughout the day at market prices, while mutual funds trade only at day’s end at a set price. This flexibility lets you buy and sell when you want, and ETFs typically generate fewer capital gains distributions to shareholders because of how their creation and redemption process works differently than mutual funds.

Performance measurements reveal major gaps between ETF types that matter tremendously for your wealth. Annualized returns measure how much your money grows each year on average over multiple years, smoothing out short-term fluctuations. Top-performing ETFs in 2024 included momentum-focused funds returning over 45% for the year, while stable broad-market ETFs returned around 11-21% annually. Understanding what drives these differences helps you pick ETFs matching your risk tolerance and time horizon for investing.

Breaking Down the ETF Universe Into Categories

The ETF market divides into several main categories based on what they track and how they work. Broad market ETFs hold hundreds or thousands of stocks representing the entire U.S. stock market or international markets with instant diversification. Sector ETFs focus only on specific industries like technology, healthcare, or finance, concentrating your bets on single market segments. Factor-based ETFs select stocks using specific rules like momentum, value, or dividend payments to identify potential winners. Leveraged ETFs use borrowed money and derivatives to multiply returns by 2x or 3x in favorable markets.

Each category serves different investment purposes and risk profiles that match different investor needs. A new investor wanting steady growth typically starts with broad market ETFs that provide maximum diversification with minimal fees. A trader betting on stock price declines might use inverse ETFs that profit when markets fall instead of rise. Someone seeking high growth willing to endure volatility might choose leveraged technology ETFs that amplify both gains and losses dramatically.

The underlying assets in ETFs include stocks, bonds, currencies, and commodities giving you exposure to virtually any investment type. Stock ETFs track companies’ ownership stakes and represent business growth potential. Bond ETFs hold debt issued by governments and corporations providing stable income streams. Commodity ETFs give you exposure to gold, oil, or agricultural products without physical ownership complications or storage costs.

The Highest-Performing ETFs: Real Data From Five Years

Historical performance data from 2020 through December 2025 reveals clear winners and patterns across the ETF landscape. Leveraged technology ETFs dominated returns, with Direxion Daily Technology Bull 3X Shares (TECL) delivering 28.69% annualized returns and ProShares Ultra Technology (ROM) matching this at 28.66% per year. These funds use borrowed money and derivatives to amplify gains when technology stocks rise, but this amplification works both ways when markets decline sharply.

The following comparison shows how dramatically returns differ across fifteen major ETF types during the five-year measurement period:

ETF Type	Annualized Return
Technology 3X Leveraged (TECL)	28.69%
Ultra Technology (ROM)	28.66%
Nasdaq-100 (QQQ)	19.09%
Growth Index (VUG)	17.55%
Morningstar Growth (ILCG)	16.00%

Standard S&P 500 ETFs provide steadier returns with less dramatic price swings throughout market cycles. Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV) both delivered around 13% annualized returns tracking the 500 largest U.S. companies. These funds offer extremely low fees of 0.03% to 0.04% annually, meaning nearly all investment gains reach your pocket instead of going to fund managers.

Broad market ETFs like Vanguard Total Stock Market ETF (VTI) returned 12.59% per year tracking nearly every U.S. stock. Value-focused ETFs like Vanguard Value Index Fund (VTV) returned 8.09% annually focusing on cheaper stocks relative to earnings. Dividend-paying ETFs like iShares Core Dividend Growth ETF (DGRO) returned 8.62% per year emphasizing income production over growth. Emerging markets ETFs underperformed significantly, with iShares Core MSCI Emerging Markets ETF (IEMG) returning just 2.93% annually as international stocks lagged U.S. performance.

Why Returns Vary Dramatically Between Different ETFs

Three main factors explain why some ETFs earn 28% annually while others earn 3% or less during the same period. First, asset allocation determines your exposure to different market segments with technology vastly outperforming other sectors. Second, leverage multiplies returns by using borrowed money and derivatives, which amplifies both gains and losses creating wild price swings. Third, market selection affects returns significantly since U.S. stocks outperformed international stocks during this period, so American-focused ETFs beat global funds.

The relationship between risk and return remains constant across all investments creating a fundamental trade-off. Higher returns always come with higher risk that you must accept knowingly and understand completely. Niche sector ETFs like those focused on biotech or semiconductors display higher volatility due to rapid industry changes. Your investment timeline directly impacts which risk level makes sense for your situation and financial goals.

An investor with 30 years until retirement can weather 50% portfolio drops without panic because time allows recovery from downturns. An investor needing money in 2 years cannot afford such volatility and should avoid aggressive ETFs entirely. Expense ratios directly cut into your returns each year regardless of market performance, making this the single largest controllable factor in your success. Index ETFs typically charge 0.03% to 0.25% annually while active ETFs charge 0.50% to 1.00% with specialty ETFs charging 0.40% to 0.95%.

Over 30 years, choosing a fund with 0.05% fees instead of 0.50% fees can result in over $1 million in additional wealth due to compounding effects working in your favor. Small fee differences matter tremendously over long timeframes because the fee compounds against you eternally. The math proves ruthless—higher fees eliminate your ability to beat market returns no matter how skilled the manager claims to be.

How The SEC Regulates ETF Disclosures and Investor Protection

The Securities and Exchange Commission maintains strict rules controlling what ETFs must tell investors and how they operate daily. Rule 6c-11 requires ETFs to post their complete portfolio holdings on their websites every business day before market opening. This daily transparency lets investors see exactly what stocks or bonds the fund holds and lets traders calculate fair values when buying or selling shares.

ETF managers must clearly identify foreign currency holdings instead of describing them simply as cash positions. The SEC also requires ETFs to disclose bid-ask spreads calculated over the previous 30 days, helping you understand your trading costs when buying or selling shares. All ETFs must file registration forms with the SEC explaining their investment strategy, risks, and fees before launching.

Crypto asset ETFs must disclose risk factors and calculation methods for their net asset value and creation processes. Failure to maintain disclosure compliance can result in deficiency letters and forced fund closure by regulators. These regulations protect investors by ensuring transparency and honesty from fund managers managing billions in shareholder wealth.

Tax Treatment of Different ETF Types and Your Obligations

Understanding ETF taxation prevents surprises when you file taxes and receive unexpected bills from the IRS. Capital gains from selling ETF shares are taxed at 0%, 15%, or 20% depending on your income level and holding period. Gains held over one year receive preferential long-term rates while short-term gains get taxed as ordinary income at your regular tax bracket.

Dividend income from ETFs gets taxed at ordinary income rates or favorable dividend rates depending on whether dividends qualify as qualified dividends. This taxation happens regardless of whether you reinvest dividends directly back into the fund or receive cash to your account. Most corporate dividends qualify for favorable rates, but some distributions including return of capital don’t receive this favorable treatment.

Leveraged and inverse ETFs create tax headaches that catch many investors unprepared and destroy after-tax returns completely. Leveraged ETFs use derivatives requiring daily rebalancing that generates frequent short-term capital gains taxed at ordinary income rates instead of favorable capital gains rates. These funds often distribute significant capital gains even when you haven’t sold shares personally, creating unexpected tax bills that surprise investors in April.

Short-term gains from derivatives receive 60/40 treatment meaning 60% get taxed as long-term gains regardless of your actual holding period with the fund. Holding ETFs in tax-advantaged accounts like 401(k)s or IRAs eliminates these tax complications completely forever. Inside these accounts, you never pay taxes on gains, dividends, or distributions regardless of how frequently the fund trades internally.

Once you withdraw money from traditional retirement accounts in retirement, you pay taxes then based on your income level at that time. This strategy works especially well for leveraged and inverse ETFs that generate frequent taxable distributions unsuitable for regular accounts. Inside a Roth IRA, you pay zero federal income taxes on gains forever making leveraged ETFs ideal for long-term growth maximization.

Core Scenarios Showing How ETF Selection Impacts Real-Life Results

Scenario One: The Conservative Investor Building Wealth Slowly

Maria is 50 years old with $100,000 saved for retirement in 12 years before she stops working. She values safety and steady growth over aggressive returns that might vanish during downturns. Maria chooses to split her money equally between a broad market S&P 500 ETF earning 13% annually and a dividend-focused ETF earning 8.5% annually.

Decision	Outcome
Balanced approach: 50% VOO + 50% DGRO	$284,200 at retirement

This blended return of 10.75% provided strong growth without the stomach-churning drops of pure growth portfolios. Maria slept well at night even during market downturns because her allocation matched her temperament. Her $100,000 grew to $284,200 in 12 years, providing retirement security and peace of mind for the future.

Scenario Two: The Aggressive Growth Trader With Time

James is 28 years old with $50,000 and 35 years until retirement when he’ll need the money. He wants aggressive growth and can tolerate 50% portfolio declines without panic because time allows recovery. James invests his entire amount in leveraged technology ETF (TECL) earning 28.69% annually but experiencing wild price swings every day.

Decision	Outcome
100% TECL (28.69% annual) in taxable account	$26.4 million but pays $7.9 million taxes

The high turnover of leveraged ETFs created short-term capital gains taxed at ordinary rates instead of favorable long-term rates. If James had placed TECL in a Roth IRA instead, he’d owe zero federal taxes on the entire $26.4 million making the account type critical. His aggressive strategy created tremendous wealth but would generate enormous tax bills in regular taxable accounts without careful planning.

Scenario Three: The Hedging Professional Protecting Wealth

Robert manages a $500,000 portfolio of established tech companies bought for the long term but worries about market corrections. He wants to protect downside risk without selling his positions that he believes in strategically. Robert buys inverse ETF shares representing 20% of his portfolio ($100,000) to hedge against potential 2025 market drops.

Decision	Outcome
No hedge when market drops 20%	Portfolio falls to $400,000

With his hedge in place and markets dropping 20%, his portfolio fell only to $460,000 because the hedge gains offset losses. However, when markets rose 15% instead, his portfolio rose only to $565,000 because the hedge cost 5% of gains. Inverse ETFs are designed for short-term trading and can deviate significantly from expected performance over longer periods due to daily rebalancing compounding effects accumulating over time.

Selecting the Right ETF Based on Your Specific Situation

Choosing the best ETF for your portfolio requires systematic evaluation across multiple dimensions that matter for outcomes. Start by determining what role the ETF plays in your broader portfolio, then identify the specific exposure you need and compare relative performance. An investor seeking U.S. stock exposure should compare ETFs tracking the S&P 500 to each other, not to international stock ETFs tracking different benchmarks.

Fund size matters significantly for practical reasons affecting your trading costs and fund stability. Tiny ETFs with $10 million under management might shut down if investors leave in a bear market. Larger ETFs have more trading volume, tighter bid-ask spreads, and stable operating costs that don’t change dramatically. Check fund size before investing in specialty ETFs that might be vulnerable to closure or limited liquidity.

Selection Step	What To Do
Define Purpose	Identify what portfolio gap needs filling
Choose Asset Class	Select stocks, bonds, commodities

Your next step involves reviewing the benchmark that the ETF tracks to understand what performance target applies. Compare expense ratios across ETF options tracking the same benchmark since lower fees equal better results. Check historical performance comparing each option to its benchmark over 3-5 years to find consistent trackers meeting their objectives.

Mistakes to Avoid When Investing in ETFs

Mistake One: Chasing Returns Without Understanding Risk Completely

Many investors see TECL’s 28% returns and buy it without understanding the leverage mechanism that creates that performance. This leveraged ETF multiplies technology sector declines just as much as gains through derivatives and borrowed money. If technology stocks drop 20%, TECL drops 60% or more depending on market volatility that day making losses extreme.

Investors who bought leveraged ETFs at peaks in 2021 and held through the 2022 bear market saw 70% portfolio declines that devastated their wealth. They panicked and sold near the bottom, locking in permanent losses that could never be recovered. The high return came with high risk that many didn’t accept voluntarily or understand when they purchased shares.

Mistake Two: Holding Leveraged or Inverse ETFs Long-term

Inverse ETFs reset their positions daily causing performance divergence significantly from expected results over longer periods due to compounding effects. An inverse ETF designed to track -1x the S&P 500 might underperform that objective by 5-10% annually if held for years continuously. The daily rebalancing works against you in sideways or choppy markets when prices move up and down randomly.

These products suit traders making 1-3 month bets based on short-term market predictions, not buy-and-hold investors. Even one year of holding typically produces worse-than-expected results due to the mathematics of daily rebalancing. Professional traders know this truth and use these ETFs only for tactical short-term positioning lasting days or weeks.

Mistake Three: Ignoring Tax Implications Entirely

An investor in a 40% tax bracket buying TECL in a regular brokerage account keeps only 60% of profits after taxes. The 28.69% return becomes roughly 17% after-tax because short-term capital gains receive no favorable treatment. The same investor buying TECL inside a Roth IRA keeps 100% of profits because Roth IRAs eliminate federal income taxes forever.

The tax difference alone could mean an extra $500,000+ over 30 years from compound growth on untaxed gains. Yet many investors never consider where they place different ETFs or understand tax efficiency. This single decision about account type creates a larger difference than ETF selection itself in many cases.

Mistake Four: Overlooking Expense Ratio Compounding Over Time

A $100,000 investment growing at 7% annually in an ETF charging 0.50% fees nets 6.50% after fees hit your account. Over 30 years at 6.50% returns, your investment grows to around $760,000, but an identical portfolio in a 0.03% fee ETF grows to around $830,000. The 0.47% annual fee difference costs you $70,000+ in lost compounding that could fund years of retirement.

Many investors accept higher fees without calculating this long-term impact or understanding how fees compound against them. They see 0.50% fees as trivial missing the mathematics entirely. In reality, 0.50% fees represent approximately 7% of your annual returns disappearing before you get them.

Mistake Five: Buying Micro-Cap or Illiquid Specialty ETFs

Tiny specialty ETFs tracking narrow market segments often have huge bid-ask spreads that cost you immediately. You might see an ETF quoted at $50.00 bid and $50.50 ask meaning that $0.50 spread equals 1% of your investment immediately lost. Combined with 0.95% expense ratios, these specialty funds eat 2% of your money before delivering a single return to you.

Stick with liquid ETFs holding at least $100 million in assets unless you have specific technical reasons otherwise. The cost savings from avoiding spreads and high fees far exceed any perceived benefits from specialty narrow-focus ETFs. Most investors should never venture beyond liquid ETFs with tight bid-ask spreads that trade millions of shares daily.

Pros and Cons of Different ETF Approaches

Approach	Pros
Broad Market ETFs (VOO, VTI)	Ultra-low fees, instant diversification, tax-efficient
Sector ETFs (XLK, QQQ)	Higher growth potential, clearer investment thesis

Broad market ETFs offer historically reliable returns capturing overall economy growth without picking winners. Sector ETFs let you express views about specific industries that you believe will outperform. Leveraged ETFs amplify returns in favorable markets using less capital to express your view.

Approach	Cons
Broad Market ETFs (VOO, VTI)	Limited outperformance, slow growth relative to strategies
Sector ETFs (XLK, QQQ)	Higher volatility, higher fees than index options

Broad market ETFs limit your upside to market returns making outperformance impossible by design. Sector ETFs carry higher volatility that scares investors during downturns. Leveraged ETFs generate tax-inefficient distributions and decay in sideways markets eliminating profitability.

Do’s and Don’ts for ETF Investing Success

Do focus on low-cost index ETFs as your portfolio’s foundation because they’ve outperformed most alternatives. Broad market ETFs charging 0.03% to 0.10% have outperformed 80% of active managers over 20-year periods. Your fees work against you every single year, making this the easiest way to beat most investors without any skill required.

Don’t assume past performance predicts future results since technology has dominated recently. Technology ETFs crushed returns from 2015-2024 due to specific factors like mobile adoption, cloud computing, and AI development. This outperformance might not repeat for the next decade as other sectors potentially lead the market forward.

Do place leveraged ETFs and other tax-inefficient products inside retirement accounts to eliminate taxes. A Roth IRA removes federal taxes on all gains forever making leveraged ETFs ideal. Traditional 401(k)s delay taxes until retirement when your tax bracket likely drops significantly after stopping work.

Don’t use inverse ETFs for periods longer than a few months because mathematics guarantee underperformance. Mathematical decay from daily rebalancing eliminates profits over time even if your market direction prediction proves correct. If you need portfolio protection for years, use traditional diversification or protective put options instead.

Do track your actual costs across commissions, fees, and bid-ask spreads because they compound. Many free trading accounts lull investors into believing they pay nothing while hiding true costs. The bid-ask spread on specialty ETFs and trading commissions add real costs that compound into thousands over years.

Don’t neglect the role that index selection plays in your returns versus alternatives. An ETF tracking the Nasdaq-100 (QQQ) will always outperform an equal-weight S&P 500 ETF (RSP) when large tech companies dominate markets. But selecting future winners in advance remains nearly impossible so diversification makes sense.

Do review your ETF holdings annually for continued relevance to your changing goals. Top-performing ETFs in one year often underperform in the next as market preferences shift dramatically. A 2024 winner might become a 2025 laggard as economic conditions change from growth to value focus.

Don’t concentrate your portfolio in single sector or theme ETFs because diversification reduces risk. Narrow theme ETFs tracking specific trends might crash when trends reverse leaving you with permanent losses. Holding many sector ETFs also creates overlap where you’re buying similar companies through multiple funds unnecessarily.

Regulatory Framework Governing ETF Operations and Safety

The Investment Company Act of 1940 and Securities Exchange Act of 1934 form the legal foundation for ETF regulation in America. All ETFs must register with the SEC disclosing their investment strategy, fees, risks, and holdings comprehensively. This registration process involves SEC review ensuring the fund provides adequate investor protection and follows all rules governing investment companies.

Federal law requires ETF managers to act in the best interests of fund shareholders when making investment decisions every day. This fiduciary standard prevents managers from secretly favoring their own interests over shareholder interests and profits. If an ETF manager benefits from transactions with the fund, they must disclose these conflicts and often obtain shareholder approval.

The SEC established Rule 6c-11 in 2019 to modernize ETF regulations and reduce bureaucratic barriers for new funds. This rule lets many ETFs operate with less regulatory burden if they maintain daily transparency and proper internal controls. ETFs operating under 6c-11 must maintain strict daily disclosure compliance or face immediate non-compliance status from regulators.

Missing even a single day of required portfolio disclosures puts an ETF out of compliance immediately. This triggers potential SEC enforcement action and could result in forced liquidation of the fund. State laws don’t regulate ETF investments directly since securities regulation falls under federal authority exclusively.

However, state investment suitability laws require brokers recommending ETFs to match recommendations to customer circumstances. A broker recommending leveraged ETFs to 75-year-old retirees facing forced withdrawals likely violates state suitability standards. These rules protect investors from unsuitable recommendations that don’t match their needs or life situations.

Real-World Examples of ETF Selection for Different Investors

The Young Professional Starting Out With Inheritance Money

Sarah is 24, earns $50,000 annually, and will receive $200,000 inheritance next year. She wants to invest long-term for retirement and won’t touch this money for 40 years before she retires. Sarah should buy a diversified portfolio of low-cost broad market ETFs providing instant diversification across thousands of stocks.

Specifically, she could put $100,000 in VOO (S&P 500), $50,000 in VTI (total U.S. market), and $50,000 in VXUS (international stocks). This provides instant diversification across 7,000+ stocks worldwide for roughly $0.05 in annual fees per $100 invested. Over 40 years at historical returns, Sarah’s $200,000 grows to approximately $8 million before taxes even without making additional contributions.

The Retiring Executive With Substantial Portfolio

Tom is 62 with $2 million and wants income to replace his $80,000 salary plus growth to cover inflation. Tom splits his portfolio into three parts strategically to achieve his dual goals. His $800,000 in dividend-focused ETFs earning 2-3% yields plus 8% growth creates baseline income while growing.

His $600,000 in bond ETFs earning 4-5% provides stable income without volatility shock. His $600,000 in growth ETFs earning 10-12% annually provides inflation protection and long-term wealth growth. This creates roughly $80,000+ annual income while providing inflation protection through the growth allocation.

His blended return of about 7% annually grows his portfolio to $13+ million by age 92. This ensures he never outlives his money even if he lives to 95 or beyond. By combining income and growth strategically, Tom created reliable retirement security.

The Experienced Trader Managing Risk Through Hedging

Alex uses $500,000 in tech stocks from his business sale as his portfolio base. He expects technology to remain strong but worries about 2025 volatility and potential market corrections. Alex keeps his core $400,000 in broad market and growth ETFs for long-term wealth building.

He buys $100,000 in inverse leveraged ETFs as downside insurance protecting against catastrophic losses. This creates a portfolio that captures upside while limiting downside to 10-15% maximum. Even if markets drop 30%, his hedge gains offset most losses keeping him solvent.

He monitors this hedge quarterly and sells it after 6 months regardless of market performance. He replaces it if market conditions remain uncertain heading forward. This active management protects his wealth while avoiding the mathematical decay of holding hedges too long.

Frequently Asked Questions About High-Returning ETFs

What is the difference between an ETF and a mutual fund?

Yes, they differ significantly. ETFs trade on exchanges throughout the day at market prices, while mutual funds trade only once daily. ETFs typically generate fewer taxable distributions and provide greater transparency through daily holdings disclosures. Mutual funds require active managers and carry higher fees reducing your returns after costs.

Can I lose more than I invest in an ETF?

No, with a critical exception for margin buyers. Regular ETF share purchases limit losses to your investment amount completely. If you buy $10,000 of shares and they fall to zero, you lose $10,000 total. However, if you borrow money from brokers buying on margin, you could lose more than your initial investment when forced to repay borrowed funds.

Should I buy individual stocks or ETFs?

It depends on your expertise and available time. ETFs provide instant diversification requiring no stock-picking skill, while individual stocks demand research ability and timing discipline. Studies show 80% of active stock pickers underperform index ETFs after fees over 20 years making this choice clear.

How do I know if an ETF tracks its benchmark properly?

Check the ETF’s tracking error published in its fact sheet on the provider’s website. Good index ETFs track within 0.05% annually of their benchmark. If an S&P 500 ETF returned 10.05% while the index returned 10.00%, that represents acceptable tracking. If it returned 9.50%, something’s wrong affecting your returns significantly.

Are leveraged ETFs good for long-term investing?

No, they carry risks unsuitable for holding periods longer than months. Leveraged ETFs generate significant capital gain distributions from derivatives requiring daily rebalancing internally. Mathematical decay in sideways markets erodes returns permanently even when your market direction prediction proves correct.

What is a reasonable expectation for ETF returns?

Historically, broad market U.S. ETFs return 9-10% annually over 20-year periods. Sector ETFs might return 8-12% depending on industry performance over decades. Conservative investors should expect 5-7% from balanced portfolios combining stocks and bonds. Recent 5-year technology sector returns of 18% annually represent above-normal performance unlikely to persist continuing forward indefinitely.

Should I buy ETFs at a discount to net asset value?

Sometimes small discounts or premiums occur during trading due to supply and demand dynamics. Most liquid ETFs trade within pennies of fair value most of the time. Buying at a 1-2% discount provides no advantage if the discount closes tomorrow during normal trading.

How many ETFs should I own in my portfolio?

Quality matters more than quantity in portfolio construction. A portfolio of 3-4 well-selected low-cost ETFs providing complete diversification beats portfolios of 20 specialty ETFs. A typical efficient portfolio might include one broad U.S. stock ETF, one international ETF, one bond ETF, and one commodity ETF.

Do I need to rebalance my ETF portfolio regularly?

Yes, rebalancing every 12 months helps maintain your target risk level. If stocks appreciate faster than bonds, your portfolio might drift from 70% stocks to 80% stocks. Selling appreciated stock ETF shares and buying bond ETFs returns you to your target and locks in gains naturally.

Can I use ETFs in a retirement account?

Absolutely, ETFs work perfectly inside 401(k)s, IRAs, and other accounts. In fact, retirement accounts prove ideal ETF homes because you avoid federal income taxes. In Roth IRAs you never pay taxes on gains forever making leveraged ETFs ideal for maximizing wealth.