3 Thematic ETFs Making New Highs Ahead of the Market
Markets have been uneven to start 2026. Major indexes have struggled to make sustained progress, former technology leaders have traded lower, stress in areas such as private credit has added to the noise and a hot conflict in the middle east compounds the uncertainty. Energy, particularly oil and gas, has been one of the few clear areas of strength.
Despite that backdrop, a small number of thematic groups have continued to attract consistent inflows and are trading at new highs. These are not defensive areas, but instead are cyclical, capital-intensive, and tied to global growth. Their outperformance suggests underlying demand is stronger than the broader market action would imply.
Three ETFs stand out: Global X Lithium & Battery Tech ETF (LIT), VanEck Semiconductor ETF (SMH) and iShares Latin America 40 ETF (ILF). All three are showing clear relative strength versus major indexes and have pushed to fresh highs this week.
Each also represents a distinct but related macro trend.
LIT provides exposure to the electrification supply chain, including lithium producers, battery manufacturers, and materials companies. Demand for battery technology continues to expand across electric vehicles, grid storage, and industrial applications. Investment in energy infrastructure and electrification remains elevated globally, supporting pricing and volume across the value chain.
SMH reflects ongoing strength in semiconductors, particularly those tied to artificial intelligence and high-performance compute. Demand for advanced chips, memory, and networking components remains robust as hyperscalers and enterprises continue to deploy capital into AI infrastructure. Earnings revisions across the group have generally remained positive, reinforcing the fundamental backdrop and despite the weak price action over the last several months in some segments.
ILF captures performance across major Latin American markets, many of which are heavily weighted toward commodities, financials, and industrials. Strength here is tied to firm commodity prices, improved capital flows into emerging markets, and a broader rotation toward non-US equities. The move also reflects relative valuation support after a prolonged period of underperformance versus US markets.
The common thread across all three is sustained capital investment tied to real economic activity, including energy systems, compute infrastructure, and resource production. These represent multi-year investment cycles supported by government policy, corporate spending, and structural demand.
In a market lacking broad leadership, persistent strength in these areas is notable. Relative performance at new highs, particularly during periods of volatility, tends to signal continued institutional demand rather than short-term positioning.
Image Source: Zacks Investment Research
Vaneck Semiconductor ETF (SMH) Boast a Top Zacks Rank
After several months of consolidation, the semiconductor sector and broader AI theme have reasserted leadership. While the sideways price action tested investor conviction, underlying demand for advanced compute remained strong, and that strength is now being reflected in price.
The VanEck Semiconductor ETF broke out of its trading range at the start of the week and has continued to build momentum, with capital rotating back into the group. The move is supported by steady earnings revisions and continued visibility into AI-driven demand across the semiconductor value chain.
SMH also carries a Zacks Rank #1 (Strong Buy), making it the highest-rated ETF among this group and reinforcing the improving fundamental backdrop alongside the technical breakout.
Image Source: TradingView
Global X Lithium ETF (LIT) Shares Breakout
Rising concerns around global oil supply, particularly tied to disruption risk in the Strait of Hormuz and broader Middle East tensions, have renewed investor focus on alternative energy. Against this backdrop, the Global X Lithium & Battery Tech ETF has attracted fresh inflows and is now trading at new highs.
That strength, however, predates the recent geopolitical developments. LIT has been trending higher since early 2025, supported by steady expansion in battery technology, solar adoption, and broader electrification initiatives. Demand continues to build across multiple end markets, including electric vehicles, grid storage, and utility-scale energy systems.
The underlying driver is straightforward: global energy demand is increasing, and supply must come from multiple sources. The investment landscape is not a binary choice between fossil fuels and alternatives. Instead, both are seeing capital investment, with lithium and battery technology positioned as a key component of the broader energy buildout.
Image Source: TradingView
iShares Latin America ETF (ILF) Quietly Makes New Highs
The iShares Latin America 40 ETF has been one of the more underfollowed sources of strength during this period of market consolidation and is now trading at new all-time highs. While attention has remained focused on US equities, capital has steadily moved into select international markets, with Latin America standing out.
ILF provides exposure to a mix of sectors tied to key global themes. The region is heavily represented in energy and materials, both of which are benefiting from firm commodity prices and rising demand tied to the AI infrastructure buildout. At the same time, the ETF includes meaningful weight in financials and other value-oriented industries, offering a different earnings profile than growth-heavy US indexes.
More broadly, ILF reflects increasing investor interest in diversification beyond the US In a more multi-polar global environment, allocations to commodity-producing and emerging markets are becoming more relevant, particularly as capital flows and relative valuations shift.
Image Source: TradingView
Should Investors Buy Shares in ILF, LIT and SMH?
The strength in VanEck Semiconductor ETF, Global X Lithium & Battery Tech ETF, and iShares Latin America 40 ETF is supported by durable macro drivers and consistent capital flows, not short-term positioning. Each is tied to multi-year investment cycles that appear to be firmly in place.
While buying at new highs can feel uncomfortable, sustained breakouts are often a sign of strong underlying demand and tend to occur during periods of institutional accumulation rather than exhaustion. That dynamic is particularly relevant in the current environment, where leadership is narrow and capital is being deployed selectively.
However, for investors, the takeaway can also be less about chasing momentum and more about recognizing where leadership is emerging, and positioning accordingly.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don’t build. It’s uniquely positioned to take advantage of the next growth stage of this market. And it’s just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it’s positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>
VanEck Semiconductor ETF (SMH): ETF Research Reports
Global X Lithium & Battery Tech ETF (LIT): ETF Research Reports
iShares Latin America 40 ETF (ILF): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Discover more from stock updates now
Subscribe to get the latest posts sent to your email.
