Not every thematic ETF thrives during market turbulence. In 2026, several once-popular innovation funds are significantly underperforming the broader market. Rising interest rates, valuation pressure, and shifting investor sentiment are hitting growth-focused sectors particularly hard. Cloud computing, disruptive technology, and software stocks have become some of the weakest areas of the ETF universe. These three funds show how quickly sentiment can turn against highly concentrated thematic investments.

Meanwhile, 2026 is showing one important thing in equity markets: even popular thematic ETFs are no guarantee of good performance. While indexes like the S&P 500 and Nasdaq Composite have benefited from the tech boom and investments in artificial intelligence in recent years, many narrowly focused funds have lagged significantly this year. Some of them have written off tens of percent since the beginning of the year and are among the weakest segments of the overall ETF market.

The main…