These 3 Unusual ETFs Have Dominated the S&P 500's Performance YTD

Key Points

• Though often overlooked by investors, ETFs with unusual themes or strategies can sometimes yield impressive results.
• Three such funds are SNOY, FCUS, and NERD.
• Each of these funds has achieved year-to-date returns as of late February 2025 that significantly outperform the S&P 500.

With thousands of options available, the landscape of exchange-traded funds (ETFs) can be overwhelming. Fortunately, many are able to accomplish their goals with a relatively small number of inexpensive, broadly diversified funds, which tend to allow casual investors to buy and hold without much additional thought.

On the other extreme are highly specialized ETFs that carry an unusual amount of risk and are designed for more active, experienced investors—think of leveraged and inverse funds, for example.

And then there are the unusual ETFs with unique themes—sometimes almost comical, sometimes more serious—and strategies. Many of these funds don't draw much investor attention because of their niche focuses, meaning that they lack substantial asset bases and trading volume.

However, three of the funds in this last category—the YieldMax SNOW Option Income Strategy ETF NYSEARCA: SNOY, the Pinnacle Focused Opportunities ETF NYSEARCA: FCUS, and the Roundhill Video Games ETF NASDAQ: NERD—may be worth a closer look. Each of these funds has trounced the S&P 500's year-to-date return of 4.2% as of February 20, 2025.

While it remains to be seen if these ETFs can keep up the momentum, they nonetheless make a compelling case for funds with unorthodox approaches.

A Covered Call Approach to Snowflake Shares

SNOY is one of a growing number of ETFs providing indirect, leveraged, or otherwise enhanced exposure to a particular security. In the case of SNOY, the target stock is non-centralized cloud-based data storage, analytics, and computing firm Snowflake Inc. NYSE: SNOW.

SNOY is designed to provide a synthetic covered call approach whereby the fund sells and writes call options. Interestingly, the fund's strategy caps potential gains if the price of SNOW increases but remains subject to all possible losses if SNOW shares decline in value.

As an actively managed fund, SNOY has a moderately high expense ratio of 0.99%. However, it has been highly successful at achieving compelling yields since its launch in June 2024—as of February 20, 2025, SNOY has a dividend yield of 32.8%.

It also has notched a year-to-date return of 16.8%, four times that of the S&P 500 in the same period.

Toggling Between Equities and Treasury Securities Exposure

FCUS adopts a unique strategy that flips between a focus on equities or Treasury securities depending upon external market conditions.

While the market is strong, the fund's portfolio holds around 30 of the 1,000 largest U.S. stocks based on factors including momentum, strength relative to peers, and earnings revisions. 

When the market is weaker or in a more turbulent position, as indicated by the fund's market risk algorithms, it shifts half of its portfolio to less-risky Treasury, cash, or bond index ETF investments. The fund also has a third setting in which 25% of the portfolio shifts toward the less-risky Treasury approach, with the remainder in stocks.

The uncertainty of the market in 2025 makes FCUS a compelling choice for investors looking to be cautious when the situation warrants it but somewhat more aggressive at opportune times. With a year-to-date return of more than 14% as of February 20, the fund's strategy has paid off well so far in 2025.

Success in a Fast-Growing Segment of the Entertainment Industry

Video games are big business—revenue from gaming worldwide is expected to top $522 billion this year alone, revenue may grow at a CAGR of 7.25% through 2029, and estimates placed the number of gamers globally at 3.3 billion in 2024.

NERD aims to capitalize on this trend by targeting companies involved in the gaming industry from developed markets around the world. The fund's focus on gaming means it has a strong international tilt as well as a multi-cap approach.

Though the top couple of names dominate the portfolio of just over 30 stocks—AppLovin Corp. NASDAQ: APP accounted for close to 15% as of February 20, 2025—it is otherwise fairly evenly distributed among larger and smaller firms primarily in the business of developing video games.

NERD's balance of different gaming stocks has yielded impressive results this year, with a year-to-date return of more than 18% as of February 21 and a one-year return of over 52% as of the same day.