Q2 2026 ETF Report Card: What Worked, What Didn't

Q2 2026 ran from April through June with the S&P 500 posting an above-average quarter. SPY and VOO both moved higher, consistent with the broader market's direction. But the story was not in the S&P. The quarter belonged to the tech-heavy indexes, a few thematic bets on AI infrastructure, and the quiet, uncelebrated performance of bonds that simply did not fall apart when they were needed most.

Here is the category-by-category breakdown of what actually happened.

The AI and Tech Trade Kept Running

The QQQ Nasdaq-100 ETF is up approximately 17-20% year-to-date as of late June. That number reflects the continued concentration of market gains in mega-cap technology companies with direct AI exposure: Microsoft, Nvidia, Apple, Meta, and Alphabet collectively set the pace. The Nasdaq-100 is not a diversified index. It is a concentrated bet on the largest tech companies in the world, and in Q2 that bet continued to pay.

VUG, Vanguard's Growth ETF, tracked closely alongside QQQ for similar reasons. Growth indexes tilt toward the same names, and when AI-adjacent earnings came in strong, the whole growth category moved with them. Neither fund is cheap to own in terms of concentration risk. Both outperformed through the quarter because the underlying companies outperformed.

The honest caveat: YTD returns from January through June are not the same as Q2 returns in isolation. April was rocky for many of these names before the recovery. The full picture requires looking at where prices started April versus where they ended June, not just the calendar-year figure. On that measure, tech growth still led every other category.

Bonds Had a Quiet Quarter. That's the Point.

BND, Vanguard's Total Bond Market ETF, charges 0.03% and held its value through Q2 without generating headlines. AGG, the iShares Core US Aggregate Bond ETF, did the same at the same cost. Neither fund generated the returns that QQQ or QTUM did. Neither was supposed to.

Bonds in a diversified portfolio are ballast, not the engine. The question to ask about BND and AGG in Q2 is not "did they beat the stock market?" The question is "did they hold their value when equities got choppy in April?" The answer was yes. That is exactly the role a 0.03% bond fund is supposed to play. The investors who understand this slept fine. The investors who loaded up on growth ETFs and had no fixed income had a more interesting April.

The interest rate environment mattered for bond prices in Q2. Rates stayed elevated but did not surge further, which allowed bond prices to stay relatively stable. BND and AGG are not exciting. At 0.03% for the whole bond market, they are not supposed to be.

Dividend ETFs: Steady Income, Modest Price Growth

SCHD yields approximately 3.5% and focuses on dividend growth: companies that have raised their dividends consistently over time. In Q2, SCHD underperformed the pure growth names in absolute price return. That is not a failure. SCHD investors received their quarterly dividend payment and held companies in sectors like financials, healthcare, and consumer staples that simply do not move with AI sentiment the way Nvidia does. The trade-off is intentional.

JEPI offered roughly 8% yield through its covered call strategy and monthly income distribution. JEPI gave up upside in the strong Q2 market, as it is designed to do. Covered call strategies sell away some of the potential gain in exchange for current income. In a quarter where tech surged, that cost was visible. Retirees drawing income monthly did not mind. Long-term accumulators in their 30s who bought JEPI expecting equity-like returns may have been disappointed.

VYM, Vanguard's High Dividend Yield ETF, yielded approximately 3.1% and provided broad dividend exposure across 400+ companies. Less concentrated than SCHD, less complex than JEPI. Q2 was an average quarter for VYM: not a standout, not a drag. That is precisely the behavior a broad dividend fund should exhibit mid-cycle.

Thematic Standouts: Quantum and Semiconductors Led

QTUM, the Defiance Quantum ETF, is up 46.1% year-to-date and 79.4% over the past 12 months as of late June. That number is not a typo. The fund holds companies working on quantum computing, machine learning hardware, and AI chip design. The returns reflect the market pricing in a world where quantum computing transitions from research phase to commercial viability faster than the 2020-era consensus expected.

Semiconductor ETFs also had a strong quarter. Funds tracking the chip supply chain, including SOXX and SMH, benefited from continued AI infrastructure spending. DRAM, the Roundhill Memory ETF focused on HBM and NAND flash, added to gains built earlier in the year on the AI chip memory thesis. The companies that physically manufacture the memory inside Nvidia's GPUs had a strong quarter because Nvidia had a strong quarter and demand for their chips did not slow.

The other side of the thematic ledger: clean energy ETFs including ICLN and TAN underperformed in Q2. Neither fund benefited from AI sentiment, and both face ongoing pressure from rate sensitivity and policy uncertainty. The thematic ETF market in Q2 looked like a barbell: AI-adjacent themes at the high end, everything else lagging.

What Q3 Sets Up

The pattern coming out of Q2 is not complicated: the categories that benefited from AI capital spending kept winning, and the categories without that tailwind did not. Q3 does not change that dynamic automatically. The AI infrastructure buildout is a multi-year spending cycle, not a one-quarter rotation.

The variables worth watching in Q3: Federal Reserve rate decisions in July and September, earnings from Nvidia, Microsoft, and Meta in late July, and whether the QTUM and DRAM momentum names start to show any signs of the mean reversion that always follows extended runs. Thematic ETFs up 46% YTD attract capital and attention. They also set up difficult comparisons in subsequent quarters.

Bond investors have a specific thing to watch: any signal that the Fed intends to cut rates in the second half of 2026 would benefit BND and AGG on price. Rate cuts push bond prices up. The yield on BND is already a reasonable income source at current levels. Rate cuts would add price appreciation on top of that.

Dividend investors in SCHD and VYM are in a queue. Their funds underperformed growth in Q2 and likely will again in Q3 if tech keeps running. The thesis for owning dividend growth funds is not "beat QQQ this quarter." It is "compound income at a growing rate over a decade while avoiding the full downside of a tech correction." Q3 will not resolve that thesis either way. It rarely does.