Markets have been uneven to start out 2026. Main indexes have struggled to make sustained progress, former expertise leaders have traded decrease, stress in areas equivalent to non-public credit score has added to the noise and a scorching battle within the center east compounds the uncertainty. Vitality, significantly oil and gasoline, has been one of many few clear areas of power.
Regardless of that backdrop, a small variety of thematic teams have continued to draw constant inflows and are buying and selling at new highs. These should not defensive areas, however as a substitute are cyclical, capital-intensive, and tied to international development. Their outperformance suggests underlying demand is stronger than the broader market motion would indicate.
Three ETFs stand out: International X Lithium & Battery Tech ETF (LIT), VanEck Semiconductor ETF (SMH) and iShares Latin America 40 ETF (ILF). All three are displaying clear relative power versus main indexes and have pushed to recent highs this week.
Every additionally represents a definite however associated macro development.
LIT offers publicity to the electrification provide chain, together with lithium producers, battery producers, and supplies corporations. Demand for battery expertise continues to broaden throughout electrical automobiles, grid storage, and industrial functions. Funding in power infrastructure and electrification stays elevated globally, supporting pricing and quantity throughout the worth chain.
SMH displays ongoing power in semiconductors, significantly these tied to synthetic intelligence and high-performance compute. Demand for superior chips, reminiscence, and networking parts stays sturdy as hyperscalers and enterprises proceed to deploy capital into AI infrastructure. Earnings revisions throughout the group have usually remained constructive, reinforcing the elemental backdrop and regardless of the weak value motion over the past a number of months in some segments.
ILF captures efficiency throughout main Latin American markets, a lot of that are closely weighted towards commodities, financials, and industrials. Power right here is tied to agency commodity costs, improved capital flows into rising markets, and a broader rotation towards non-US equities. The transfer additionally displays relative valuation help after a protracted interval of underperformance versus US markets.
The widespread thread throughout all three is sustained capital funding tied to actual financial exercise, together with power programs, compute infrastructure, and useful resource manufacturing. These signify multi-year funding cycles supported by authorities coverage, company spending, and structural demand.
In a market missing broad management, persistent power in these areas is notable. Relative efficiency at new highs, significantly during times of volatility, tends to sign continued institutional demand slightly than short-term positioning.
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Vaneck Semiconductor ETF (SMH) Boast a Prime Zacks Rank
After a number of months of consolidation, the semiconductor sector and broader AI theme have reasserted management. Whereas the sideways value motion examined investor conviction, underlying demand for superior compute remained robust, and that power is now being mirrored in value.
The VanEck Semiconductor ETF broke out of its buying and selling vary at first of the week and has continued to construct momentum, with capital rotating again into the group. The transfer is supported by regular earnings revisions and continued visibility into AI-driven demand throughout the semiconductor worth chain.
SMH additionally carries a Zacks Rank #1 (Sturdy Purchase), making it the highest-rated ETF amongst this group and reinforcing the enhancing elementary backdrop alongside the technical breakout.
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International X Lithium ETF (LIT) Shares Breakout
Rising issues round international oil provide, significantly tied to disruption danger within the Strait of Hormuz and broader Center East tensions, have renewed investor concentrate on different power. In opposition to this backdrop, the International X Lithium & Battery Tech ETF has attracted recent inflows and is now buying and selling at new highs.
That power, nonetheless, predates the latest geopolitical developments. LIT has been trending greater since early 2025, supported by regular growth in battery expertise, photo voltaic adoption, and broader electrification initiatives. Demand continues to construct throughout a number of finish markets, together with electrical automobiles, grid storage, and utility-scale power programs.
The underlying driver is easy: international power demand is rising, and provide should come from a number of sources. The funding panorama shouldn’t be a binary selection between fossil fuels and alternate options. As an alternative, each are seeing capital funding, with lithium and battery expertise positioned as a key element of the broader power buildout.
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iShares Latin America ETF (ILF) Quietly Makes New Highs
The iShares Latin America 40 ETF has been one of many extra underfollowed sources of power throughout this era of market consolidation and is now buying and selling at new all-time highs. Whereas consideration has remained targeted on US equities, capital has steadily moved into choose worldwide markets, with Latin America standing out.
ILF offers publicity to a mixture of sectors tied to key international themes. The area is closely represented in power and supplies, each of that are benefiting from agency commodity costs and rising demand tied to the AI infrastructure buildout. On the similar time, the ETF consists of significant weight in financials and different value-oriented industries, providing a special earnings profile than growth-heavy US indexes.
Extra broadly, ILF displays rising investor curiosity in diversification past the US In a extra multi-polar international surroundings, allocations to commodity-producing and rising markets have gotten extra related, significantly as capital flows and relative valuations shift.
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Ought to Traders Purchase Shares in ILF, LIT and SMH?
The power in VanEck Semiconductor ETF, International X Lithium & Battery Tech ETF, and iShares Latin America 40 ETF is supported by sturdy macro drivers and constant capital flows, not short-term positioning. Every is tied to multi-year funding cycles that look like firmly in place.
Whereas shopping for at new highs can really feel uncomfortable, sustained breakouts are sometimes an indication of robust underlying demand and have a tendency to happen during times of institutional accumulation slightly than exhaustion. That dynamic is especially related within the present surroundings, the place management is slim and capital is being deployed selectively.
Nevertheless, for traders, the takeaway may also be much less about chasing momentum and extra about recognizing the place management is rising, and positioning accordingly.
Zacks Names #1 Semiconductor Inventory
This under-the-radar firm makes a speciality of semiconductor merchandise that titans like NVIDIA do not construct. It is uniquely positioned to make the most of the subsequent development stage of this market. And it is simply starting to enter the highlight, which is precisely the place you wish to be.
With robust earnings development and an increasing buyer base, it is positioned to feed the rampant demand for Synthetic Intelligence, Machine Studying, and Web of Issues. International semiconductor manufacturing is projected to blow up from $452 billion in 2021 to $971 billion by 2028.
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VanEck Semiconductor ETF (SMH): ETF Analysis Experiences
International X Lithium & Battery Tech ETF (LIT): ETF Analysis Experiences
iShares Latin America 40 ETF (ILF): ETF Analysis Experiences
This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
