Golden gains

Gold’s prolonged bull run is showing no signs of slowing. The yellow metal has struck fresh all-time highs near $3,650 per ounce in recent hours. Analysts are tipping further gains as economic worries (like returning inflation and growth-hitting tariffs) spook investors.

Goldman Sachs — which recently said gold prices could touch $5,000 per ounce in the next year — has said in recent days that buying gold stocks could be an effective way to capitalise on bullion prices.

It’s a strategy that exposes investors to the unpredictabilities and dangers of metals mining. Disappointments at the exploration, mine development and production phases can be common. In these situations, their profits can underwhelm even if gold prices continue rising.

The iShares Gold Producers ETF (LSE:SPGP), which — at the latest count — had holdings in 68 different miners can reduce stock-specific risk but it can’t eliminate it.

Having a stake in metal producers over physical gold and gold-price-tracking funds has significant advantages. Profits at miners can grow at a faster rate than the gold price, as revenues rise in line with gold prices while costs stay largely fixed. This can lead to far greater capital gains.

Gold producers can also provide a dividend, while physical metal and price tracking funds don’t. The dividends the iShares Gold Producers ETF receives are automatically reinvested into the fund, providing an added boost to growth.

With a focus on large-cap miners including Agnico Eagle, Barrick Gold and Wheaton Precious Metals, this iShares instrument provides great stability while still harnessing gold’s long-term investment potential.

A new ETF

Defence is another sector that’s tipped for strong and sustained expansion. This makes funds such as the WisdomTree Europe Defence (LSE:WDEP) — which has risen 14% in value since its March launch — also worth consideration in my view.

As its name suggests, it focuses on European companies. This may have a major advantage as continental defence spending is tipped to rise especially strongly over the long term. This geographical focus also reduces the threat of lower US military spending, which is more of a natural threat to North American contractors. That risk is still an issue for it though.

In 2024, European arms spending rose 17% to $693m, according to the Stockholm International Peace Research Institute. Canadian demand meanwhile increased 7% year on year, to $29m. It’s a trend industry boffins expect to continue, with GlobalData predicting combined expenditure from Europe and Canada to hit $1.3bn by 2035.

The WisdomTree Europe Defence fund provided significant exposure to large and diversified arms suppliers like BAE Systems and Rheinmetall. Indeed, more than 91% of the fund is tied up in businesses with market caps of £10bn and above. It therefore benefits from scale and stability, and may be able to better weather problems like competition and supply chain challenges.

In total, it has holdings in 24 different defence shares, which I’m optimistic will deliver excellent long-term returns.

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With this in mind, here are three such funds that stand out for serious consideration.

Top gold ETF

Demand for gold ETFs like iShares Physical Gold (LSE:SGLN) has exploded in 2025. According to the World Gold Council (WGC), these funds experienced inflows of 397 tonnes over the first half — to put that into context, that was the best semi-annual performance since the depths of the pandemic in 2020.

According to the Council: “fluctuating US trade policy; a weaker US dollar; heightened geopolitical tensions punctuated by regional flare-ups; close attention to the respective paths of inflation and economic growth; and fresh record highs in the gold price” attracted fresh investment inflows.

There’s no guarantee that gold ETFs will keep growing in value. A recovering US dollar alone may put gold prices under strain. But with all these factors still in play, I’m confident of further gains. The iShares Physical Gold product has risen 20.2% since the start of 2025.

New defence fund

Defence stocks are also in high demand as those geopolitical tensions grow. The WisdomTree Europe Defence ETF (LSE:WDEP) has effectively harnessed this trend, rising 21.8% in value since its launch in mid-March.

The fund invests in Europe’s largest defence companies, and includes UK shares BAE Systems and Rolls-Royce from the UK. In total, it holds shares in 24 different contractors, giving it exposure to sub-sectors including aerospace, cyber security, shipbuilding, and munitions.

BAE Systems — currently the ETF’s second-largest holding — underlined the defence sector’s bright outlook this week when it upgraded its own full-year sales and profits forecasts. It now expects revenues to rise 8%-10%, and underlying earnings before interest and tax to rise by 9%-11%.

There’s a risk that supply chain and cost issues may impact the fund’s performance. But on balance, I’m confident it’ll keep rising strongly.

Euro star

Demand for European shares has also detonated this year. Fears over economic and political conditions in the US — and concerns over the valuation of Wall Street equities — has supercharged interest in listed companies closer to home.

It’s a trend I think could continue, making funds like the HSBC EURO STOXX 50 ETF (LSE:H50E) worth a close look. This particular one’s risen 10.2% in the year to date, outperforming trackers that focus on US and global equities.

It comprises 50 of the European Union’s largest stocks, including the likes of SAP, UniCredit, LVMH, and Airbus. As you can see from this list, it offers wide exposure by both country and industry. So investors can effectively spread risk and target a broad range of investment opportunities.

I’m confident in the ETF’s long-term prospects, even amid lingering uncertainty around regional interest rates.

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The UK and world economies aren’t quite out of the woods however. And so it could also be a good idea to look at some choice investment trusts and exchange-traded funds (ETFs) to also diversify an investor’s holdings.

With this in mind, here are two top stocks to consider for a winning Stocks and Shares ISA.

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Taylor Wimpey — 8%+ dividend yields

Housebuilder Taylor Wimpey’s (LSE:TW.) a FTSE 100 share I own in my own portfolio for dividends. Encouragingly for me and other investors, City analysts expect payouts to rise steadily over the next few years, as illustrated below:

As with any UK share, these dividends are by no means guaranteed. In this case, dividends could be impacted by a sharp economic downturn that adversely impacts home sales.

While this is a risk, I’m optimistic that the housing market will remain rock-solid as interest rates fall further. Earlier rate cuts pushed Taylor Wimpey’s order book £200m higher in the year to 27 April, to £2.3bn, latest financials showed.

The housebuilders are receiving support from elsewhere too, like an intensifying price war among mortgage suppliers. The ‘Bank of Mum and Dad’ is also supporting the market through generous cash gifts given to first-time buyers.

Estate agency Savills says that 52% of these buyers received financial assistance from their parents in 2024, the second-highest figure since 2013.

I plan to hold my Taylor Wimpey shares for the long haul, as the UK’s fast-growing population could support excellent returns for years to come.

WisdomTree Europe Defence ETF — a surging fund

Since launching in March, the WisdomTree Europe Defence ETF (LSE:WDEP) has risen a healthy 6.1% in value. This explains in part the appeal of the defence sector as a lifeboat during uncertain economic times.

However, this is only half the story, with expectations of prolonged continental rearmament also boosting the fund’s demand. This is something I think could run and run as Europe’s NATO contingent supercharge their defence budgets.

According to the respected Stockholm International Peace Research Institute (SIPRI), European arms spending leapt 17% last year, to $693bn, far above the 9.4% rise reported across the broader globe. It noted that “all European countries increased their military spending in 2024 except Malta“, an increase that primarily reflected tension over Russian expansionism.

Through WisdomTree’s defence ETF, investors can get exposure to some of Europe’s largest defence companies including BAE Systems, Rolls-Royce, Leonardo and Rheinmetall. This blue-chip focus gives it plenty of scope to rise further, in my opinion.

Some of the fund’s key constituents also sell large amounts of hardware to the US. And so they are vulnerable to reduced defence spending from Washington. However, the fund’s diversified approach — it holds shares in 24 different companies — would help limit such a scenario on overall returns.

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Goldman Sachs Physical Gold ETF

Grabbing exposure to gold is a good idea to consider as uncertainty over US economic and foreign policy continues. The Goldman Sachs Physical Gold ETF (NYSEMKT:AAAU) is one attractive way to play this theme, in my opinion.

According to retailer BullionVault, gold prices rose 22% on a US dollar basis in the first 100 days of Donald Trump’s second Presidential term. This was the greatest gain since the early days of Richard Nixon’s second term in 1973, and if the current President’s first stint in the White House is any guide, expect more fireworks that could continue propelling gold values higher.

With investment vehicles like Goldman Sachs Physical Gold, investors don’t have the hassle or the expense of buying and storing gold. And unlike purchasing gold stocks, they aren’t exposed to the unpredictable mining industry. Here, exploration, mine development or production issues can cause share prices to drop like a stone.

This fund simply tracks the spot bullion price up and down. And with a management charge of 0.18%, it’s a pretty cost-effective way to do it. Be mindful though, there’s no guarantee gold will keep appreciating, and a reversal (due to profit-taking or rising risk appetite, for instance) would similarly drag ETFs like this lower.

Goldman Sachs’ product has risen at an annualised rate of 14% over the last five years. Given current macroeconomic and geopolitical uncertainty, and the US dollar steadily falling, I think it’s a fund to consider.

WisdomTree Europe Defence ETF

The WisdomTree Europe Defence ETF’s (LSE:WDEP) another fund to think about that could potentially thrive in these tough times. The stable nature of arms spending across the economic cycle makes the sector a natural safe haven.

However, this isn’t the chief reason the fund’s worth considering today. I think it could surge as European nations boost defence spending in response to shifting global foreign policy. NATO chief Mark Rutte’s demand that bloc members spend “considerably more than 3%” of their GDPs on armaments underlines the direction of travel.

This WisdomTree fund — which was launched in March — invests in a range of continental defence businesses like aerospace contractors, armour manufacturers, training providers and cybersecurity specialists. In total, it has holdings in 24 businesses, which minimises the effect that issues affecting any single company may have on final returns.

It also means the fund holds rock-solid industry heavyweights such as BAE Systems, Thales and Rheinmetall alongside smaller operators with greater growth potential.

A word of warning however. Soaring share prices across defence means the trust’s estimated price-to-earnings (P/E) ratio is a high 27.5 times. This could leave it vulnerable to a sharp reversal if sector news flow worsens.

But on balance, I believe the potential rewards of this ETF may outweigh the risks.

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