Markets are shifting quickly, and investors are rethinking how to diversify their portfolios. Inflation remains stubborn, while international stocks keep trading at deep discounts. Small caps may finally be entering an earnings rebound. In this environment, some of the best ETFs may come from areas that investors have overlooked for years.

Philip Blancato, president and CEO of Ladenburg Thalmann Asset Management, believes investors need to widen their tool kits for next year. He says that while the AI investor revolution has been strong, valuations have become stretched.

"We're at this unusual moment here with the market that's really looking for a catalyst to go higher," he added. "And without one, we see quite a bit of profit-taking."

Best ETFs look to future

Blancato says investors need to come back to reality. But he also forecasts a strong 2026.

New York-based Ladenburg oversees more than $7 billion in assets for individuals, families, endowments and retirement plans. It is a wholly owned subsidiary of Osaic Holdings, which includes brokerage, investment banking and stock research with about $800 billion in client assets.

Before joining Ladenburg, Blancato held senior investment roles at firms like Merrill Lynch and Prudential, where he focused on asset-allocation research and managed advisory platforms. He is also chief market strategist at Osaic, regularly providing macroeconomic commentary on interest rates, inflation, global markets and portfolio positioning.

Blancato highlights three funds he views as well-positioned for the coming year. Each one captures a different market theme: commodities, international and small caps.

Finish reading Blancato's 2026 forecast for investors at Investors Business Daily.

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