2 ETFs I’d Buy in Response to Goldman’s 2026 Investment Forecast

The biggest takeaway from Goldman Sachs’ 2026 investment forecast, at least in my view, has to be that a more active approach might be more worth considering over a passive one, especially if you subscribe to the belief that the S&P 500 is destined for 6.5% in annual returns over the next decade, which is quite modest, even disappointing, given many investors might have the expectation for a long-term average gain closer to 10%.

Of course, higher valuations and hotter returns in the past three years mean that it’ll take more from companies to keep up the blistering pace. Either way, with the S&P fresh off a 16% gain, many investors might be a bit worried that we might be overdue for a year in the red. Undoubtedly, if 2026 were to be a down year, one has to think it’d be the AI trade that’s to blame. In any case, I think there’s ample value in heeding Goldman’s advice, whether it’s picking stocks outside of the U.S. market or showing the mid- and small-cap stocks more appreciation.

2026 could be another solid year for stocks, as the economy keeps rolling

While the long-term (think the decade ahead) return forecast might be more muted, Goldman Sachs still sees 2026 as a good year for American stocks, with a target of 7,600 for the S&P 500. Whether 2026 is the last big up year for markets before things get flatter or more choppier remains the big question. Either way, the AI revolution is continuing to unfold, and there are numerous drivers in place that could propel the S&P up around 11% for this year. 

Relative to the past three years, an 11% gain seems very modest, but for investors willing to pick their spots, I think there are ways to do a bit better, not just in 2026 but over the next several years. Though Goldman didn’t give ETF picks (it tends to recommend individual stocks), I do think that passive investors have quick and easy ways to shift things up in 2026. Here are two ETFs I’d watch as Goldman’s forecast of “sturdy” growth looks to come true in this new year:

iShares Core S&P Small-Cap ETF

The iShares Core S&P Small-Cap ETF (NYSEARCA:IJR) is a quick way to expose your portfolio to the neglected small caps, especially if the market rally looks to broaden out. In 2025, the small caps had a relatively muted year, trailing the S&P and most major international indices. Despite this, I see significant value to be had in the space as the Fed keeps lowering interest rates while M&A activity looks to pick up.

Though it’s too soon to tell if an M&A boom will hit in 2026, I do agree with Goldman’s forecast, which calls for small-cap upside. And it’s upside that could be front-loaded in the first half. Whether you’re in it for the lower valuations, lower rates, or the added upside as America’s economy shines brighter, I find ETFs like the iShares Core S&P Small-Cap ETF to be too tempting to pass up, especially after enduring a 4% year-end dip.

Vanguard FTSE Developed Markets Index Fund ETF

The Vanguard FTSE Developed Markets Index Fund ETF (NYSEARCA:VEA) actually beat the S&P by nearly double last year, with just shy of 31% in gains. Undoubtedly, international markets have been the place to be, and while it feels like a S&P-beating performance will be harder to pull off in the new year, given the U.S. economic growth could get hot as the AI productivity boom plays out, I still see upside in the modest valuation in the global ETFs.

With a good mix of international stocks across industries, I’d be inclined to think about rotating into the ETF if you lack international exposure and are looking for a cheap way to fix that. Even if you’re not a big fan of investing outside of the U.S., I do find the valuations to be tempting, especially compared to the S&P.

Sure, the S&P deserves a premium, given its now-hefty AI exposure, but if that premium remains too high, returns from here could be relatively limited. Either way, the 17.1 times trailing price-to-earnings (P/E) of the Vanguard FTSE Developed Markets Index Fund ETF is certainly tempting, especially for value-minded investors reluctant to pay more than 27 times P/E for more exposure to the S&P 500.