My Contrarian Equity ETF Picks For 2026

U.S. Energy ETFs

According to ETF Central segment data, U.S. energy tops the one-year outflow list as of November 11, with about $42.69 billion in AUM spread across 22 ETFs, having lost $10.32 billion over the same period.

Energy is a cyclical, boom-or-bust sector, and right now, performance is trending toward the latter. Crude oil prices are hovering around $60 per barrel, down from about $68 a year ago.

Geopolitical dynamics are also weighing on sentiment. OPEC crude oil production recently rose to about 30.34 million barrels per day, roughly 5% higher than a year ago, which has added to global supply pressures and limited price support.

Within the energy ETF category, investors can choose between futures-based funds or equity producers. I prefer the latter to avoid the risks of contango and the added complexity of K-1 tax forms.

A standout in this space remains the Energy Select Sector SPDR Fund

. For a 0.08% expense ratio, it tracks 22 S&P 500 energy companies weighted by market capitalization. It’s a low-cost, liquid option for investors seeking diversified energy exposure without derivatives.

U.S. Small-Cap ETFs

Small-cap stocks have been laggards for more than a decade, as the Fama-French size factor has failed to deliver the historical outperformance it once did. The picture has been even worse for small-cap ETFs, which saw $8.63 billion in outflows across 50 funds over the past year. Still, the segment remains significant, with $312.07 billion in total AUM.

Part of the challenge comes down to sector composition. A large share of small-cap companies operate in consumer discretionary and industrial sectors, which are tightly linked to the health of the domestic economy. Uncertainty from tariffs and weaker demand has weighed heavily on these firms.

Smaller manufacturers and retailers, for example, often face higher input costs and less pricing power, leaving margins more exposed when trade tensions rise or supply chains tighten.

If I were to make a bet on small caps, I’d use the iShares Core S&P Small-Cap ETF

. I prefer it over Russell 2000 index-tracking competitors because the S&P SmallCap 600 Index includes additional criteria requiring positive earnings over the most recent quarter and the past four quarters combined

This quality screen helps weed out weaker “junk” names that often populate other small-cap benchmarks, making IJR a more disciplined and durable option for small-cap exposure.

U.S. Healthcare ETFs

Finally, we have the healthcare sector, which has seen $8.54 billion in net inflows over the trailing year, leaving the 22 ETFs in the segment with a combined $82.08 billion in assets under management.

Negative sentiment in the sector hasn’t been uniform; it is largely concentrated in two subsectors: biotechnology and healthcare insurers.

For insurers, policy shifts under the Donald Trump administration have rattled markets, as steps to redirect funding from insurers to individuals created uncertainty around revenue flows.

Meanwhile, in biotech, the nomination of Robert F. Kennedy Jr. to lead the U.S. Food & Drug Administration and changes in federal agency restructuring have raised questions about regulatory stability and future drug-approval timelines.

Structurally, healthcare has long been regarded as a defensive sector—one that holds up well during economic downturns. But it isn’t immune to idiosyncratic risk; when you tilt an allocation into healthcare, you still need to watch for subsector-specific issues and policy risk.

For that reason, if you are using healthcare as a broad sector tilt rather than a narrow bet, a more diversified vehicle makes sense. For that role, my go-to ETF is the Vanguard Health Care ETF

.

It has an expense ratio of 0.09% and gives you market-cap-weighted exposure to 351 large, mid and small-cap companies across all underlying healthcare industries—including pharmaceuticals, services,  medical devices, insurance, and biotechnology.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.