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Exchange-traded funds (ETFs) are excellent products to consider for both new and experienced SIPP investors. These diversified vehicles help spread risk across a wide range of assets. And the very best ones do this while still delivering stunning returns.
Take the iShares Digital Security ETF (LSE:LOCK), HANetf Future of Defence ETF (LSE:NATP), and iShares Core MSCI Europe ETF (LSE:SMEA) for instance. These fantastic funds have risen between 11% and 42% since 1 January.
I’m convinced they can keep surging, too, which is why I’ve bought them in my own portfolio. But what could drive them even higher? Let’s take a look.
Booming sector
The iShares Digital Security ETF’s leapt 11% in 2025 as the sector outlook has steadily improved. Major cyber attacks this year alone, like those that crippled production at Jaguar Land Rover and (more recently) stole sensitive Foreign Office data, underline the importance of having robust online security.
Threat levels are only going to increase, as state-backed hackers and AI-assisted attacks grow in number. Statista analysts expect average annual market growth of 5.9% between now and 2030. If true, funds like this should deliver strong long-term returns.
This iShares ETF right now holds shares in 110 different companies. I think this diversified approach is essential — it can still fall if major holdings experience systems failures (as we saw with Cloudflare in November). But the severity of any single setback like this is spread across the fund, limiting the risk of sharp price falls.
Doubled in price
The HANetf Future of Defence fund’s been one of the best-performing defence sector ETFs in recent times. Thanks to a brilliant 42% rise in 2025, total returns have leapt to 127% over a five-year horizon.
The fund — which holds 60 different global stocks — provides exposure to classic defence stocks like BAE Systems and Lockheed Martin. However, it also has significant holdings in cybersecurity stocks including Cisco and Palantir, reflecting the rising role of cyberspace in global warfare. I’m especially excited by this characteristic for the reasons described above.
This ETF could climb further as NATO nations hike defence spending amid growing geopolitical uncertainty. That’s despite the problem of rising government debts and their potential impact on arms budgets.
Euro star
The iShares Core MSCI Europe ETF is up 25% since 1 January, reflecting strong gains across UK and European stock markets. Demand for lower-priced continental companies has grown as investors seek out value opportunities.
Can the fund keep delivering enormous returns, though? I’m convinced it can, and not just because European shares continue to offer strong value after years of underperformance. Fears over an AI bubble continue to grow, which I feel could continue to drive market rotation out of US shares.
This fund holds shares in a wide range of companies (403 in all), which limits exposure to any one region or sector. Some of its major holdings include ASML, AstraZeneca, Deutsche Telekom, and Rolls-Royce.
Though it’s denominated in euros — which leaves me exposed to exchange rate volatility — I expect this fund to keep delivering impressive returns for my SIPP.
