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The year 2022 has been turbulent for the global stock market, which was marred by global monetary tightening, recession fears and a war in Ukraine. The global stocks are on pace to close the worst year since the financial crisis in 2008.
The Fed has been on an aggressive tightening spree for more than decades. Fed Chair Jerome Powell raised interest rates for the seventh time this year, taking the benchmark rate to the range of 3.75% and 4.00% — the highest level since 2008. The hike in interest rates has made borrowing expensive, pushed up the cost of buying a new car or house and increased the cost of carrying credit card debt.
Not only were trillions of dollars wiped off the world stocks, the year was also marked by bond market tantrums, whip-sawing currency, and the collapse of a few crypto empires. On the other hand, commodities are the best-performing asset class of 2022 with everything from metals, energies to agriculture racking up astronomical double to triple-digit gains (read: 5 ETF Stories of 2022 to Stay Hot in 2023).
Given this, we have highlighted three ETFs, each from the best and worst-performing zones of 2022:
Best Zones
Turkey
Turkish stocks have been the biggest winners this year. While Turkey has also been hit hard by inflation, like the rest of the world, and its currency — lira — has plummeted against the U.S. dollar and other leading global currencies, its stock market thrived because of divergence in the monetary policy. The central bank has been slashing interest rates to prop up consumer spending at a time when other countries are following the rate-hike path. As such, iShares MSCI Turkey ETF (TUR - Free Report) climbed more than doubled. It offers exposure to a broad range of companies in Turkey by tracking the MSCI Turkey IMI 25/50 Index. iShares MSCI Turkey ETF holds 54 stocks in its basket, with key holdings in industrials, materials, financials and consumer staples.
iShares MSCI Turkey ETF has amassed $413.4 million and trades in a volume of 307,000 shares a day on average. It charges 58 bps in annual fees.
Interest Rate Hedge
Rising rate worries have provided a boost to Simplify Interest Rate Hedge ETF (PFIX - Free Report) . This is especially true as the Fed has been on an aggressive tightening spree for more than decades. Fed Chair Jerome Powell raised interest rates for the seventh time this year, taking the benchmark rate to the range of 3.75% and 4.00% — the highest level since 2008. Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge. It seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases while providing the potential for income (read: Interest Rate Hedge ETF Wins in 2022: What's Behind the Surge?).
Simplify Interest Rate Hedge ETF holds a large position in over-the-counter interest rate options intended to provide a direct and transparent convex exposure to large upward moves in interest rates and interest rate volatility. It invests in long-dated put options on 20-year US Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection. PFIX has accumulated $388.6 million in its asset base and trades in an average daily volume of 339,000 shares. It charges 50 bps in annual fees.
Energy
The energy sector has been the outperformer this year on surging oil prices. Tightening supply and improving demand fundamentals have been driving prices higher. Overall demand for fuel has rebounded to the pre-pandemic levels. VanEck Vectors Oil Services ETF (OIH - Free Report) has climbed 65% this year. It tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. VanEck Vectors Oil Services ETF holds 25 stocks in its basket, with a higher concentration on the top two firms.
With AUM of $2.6 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. It trades in an average daily volume of 803,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Energy ETFs Beat S&P 500 in 2022, More Gains Likely in 2023).
Worst Zones
Technology
The technology sector has been badly caught in a selling spree triggered by rate hikes. This is because it relies on easy borrowing for superior growth, and its value depends heavily on future earnings. A rise in long-term yields lowers the present value of companies’ future earnings, sparking fears of overvaluation. Viridi Bitcoin Miners ETF has tumbled 87% this year. It is an actively managed ETF focused on the securities of companies that engage in Bitcoin mining, holding 21 stocks in its basket.
Viridi Bitcoin Miners ETF will not invest in Bitcoin directly or indirectly through the use of derivatives. Instead, it invests in companies that process transactions on the Bitcoin network in exchange for newly minted Bitcoin, and fabricate or manufacture chips used in specialized Bitcoin mining computers.Viridi Bitcoin Miners ETF has attracted $2.6 million in its asset base. It charges 90 bps in annual fees and trades in an average daily volume of 9,000 shares.
Cannabis
Being a high-growth sector, cannabis has been a victim of a broad market sell-off. AdvisorShares Pure US Cannabis ETFMSOS has plunged 72.7% this year. It is the first actively managed U.S.-listed ETF with dedicated cannabis exposure focusing exclusively on U.S. companies, including multi-state operators. AdvisorShares Pure US Cannabis ETF holds 30 securities in its basket with a double-digit concentration on the top four firms. AdvisorShares Pure US Cannabis ETF is highly skewed toward MSOs in terms of sector, making up for 95% of the portfolio.
AdvisorShares Pure US Cannabis ETF has amassed $456.3 million in its asset base while trading in an average daily volume of $3.5 million shares. AdvisorShares Pure US Cannabis ETF charges 80 bps in annual fees.
Shipping
The dry bulk shipping market suffered a major slump triggered by the lockdowns in China and concerns over the country’s property market. Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) has declined 68%. It is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule (read: 5 Niche ETFs That Were in Green Last Week).
Breakwave Dry Bulk Shipping ETF has accumulated about $37.1 million in AUM and trades in a good volume of about 285,000 shares per day on average. It charges a higher annual fee of 3.50%.
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Top and Flop ETFs of 2022
The year 2022 has been turbulent for the global stock market, which was marred by global monetary tightening, recession fears and a war in Ukraine. The global stocks are on pace to close the worst year since the financial crisis in 2008.
The Fed has been on an aggressive tightening spree for more than decades. Fed Chair Jerome Powell raised interest rates for the seventh time this year, taking the benchmark rate to the range of 3.75% and 4.00% — the highest level since 2008. The hike in interest rates has made borrowing expensive, pushed up the cost of buying a new car or house and increased the cost of carrying credit card debt.
Not only were trillions of dollars wiped off the world stocks, the year was also marked by bond market tantrums, whip-sawing currency, and the collapse of a few crypto empires. On the other hand, commodities are the best-performing asset class of 2022 with everything from metals, energies to agriculture racking up astronomical double to triple-digit gains (read: 5 ETF Stories of 2022 to Stay Hot in 2023).
Given this, we have highlighted three ETFs, each from the best and worst-performing zones of 2022:
Best Zones
Turkey
Turkish stocks have been the biggest winners this year. While Turkey has also been hit hard by inflation, like the rest of the world, and its currency — lira — has plummeted against the U.S. dollar and other leading global currencies, its stock market thrived because of divergence in the monetary policy. The central bank has been slashing interest rates to prop up consumer spending at a time when other countries are following the rate-hike path. As such, iShares MSCI Turkey ETF (TUR - Free Report) climbed more than doubled. It offers exposure to a broad range of companies in Turkey by tracking the MSCI Turkey IMI 25/50 Index. iShares MSCI Turkey ETF holds 54 stocks in its basket, with key holdings in industrials, materials, financials and consumer staples.
iShares MSCI Turkey ETF has amassed $413.4 million and trades in a volume of 307,000 shares a day on average. It charges 58 bps in annual fees.
Interest Rate Hedge
Rising rate worries have provided a boost to Simplify Interest Rate Hedge ETF (PFIX - Free Report) . This is especially true as the Fed has been on an aggressive tightening spree for more than decades. Fed Chair Jerome Powell raised interest rates for the seventh time this year, taking the benchmark rate to the range of 3.75% and 4.00% — the highest level since 2008. Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge. It seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases while providing the potential for income (read: Interest Rate Hedge ETF Wins in 2022: What's Behind the Surge?).
Simplify Interest Rate Hedge ETF holds a large position in over-the-counter interest rate options intended to provide a direct and transparent convex exposure to large upward moves in interest rates and interest rate volatility. It invests in long-dated put options on 20-year US Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection. PFIX has accumulated $388.6 million in its asset base and trades in an average daily volume of 339,000 shares. It charges 50 bps in annual fees.
Energy
The energy sector has been the outperformer this year on surging oil prices. Tightening supply and improving demand fundamentals have been driving prices higher. Overall demand for fuel has rebounded to the pre-pandemic levels. VanEck Vectors Oil Services ETF (OIH - Free Report) has climbed 65% this year. It tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. VanEck Vectors Oil Services ETF holds 25 stocks in its basket, with a higher concentration on the top two firms.
With AUM of $2.6 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. It trades in an average daily volume of 803,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Energy ETFs Beat S&P 500 in 2022, More Gains Likely in 2023).
Worst Zones
Technology
The technology sector has been badly caught in a selling spree triggered by rate hikes. This is because it relies on easy borrowing for superior growth, and its value depends heavily on future earnings. A rise in long-term yields lowers the present value of companies’ future earnings, sparking fears of overvaluation. Viridi Bitcoin Miners ETF has tumbled 87% this year. It is an actively managed ETF focused on the securities of companies that engage in Bitcoin mining, holding 21 stocks in its basket.
Viridi Bitcoin Miners ETF will not invest in Bitcoin directly or indirectly through the use of derivatives. Instead, it invests in companies that process transactions on the Bitcoin network in exchange for newly minted Bitcoin, and fabricate or manufacture chips used in specialized Bitcoin mining computers.Viridi Bitcoin Miners ETF has attracted $2.6 million in its asset base. It charges 90 bps in annual fees and trades in an average daily volume of 9,000 shares.
Cannabis
Being a high-growth sector, cannabis has been a victim of a broad market sell-off. AdvisorShares Pure US Cannabis ETF MSOS has plunged 72.7% this year. It is the first actively managed U.S.-listed ETF with dedicated cannabis exposure focusing exclusively on U.S. companies, including multi-state operators. AdvisorShares Pure US Cannabis ETF holds 30 securities in its basket with a double-digit concentration on the top four firms. AdvisorShares Pure US Cannabis ETF is highly skewed toward MSOs in terms of sector, making up for 95% of the portfolio.
AdvisorShares Pure US Cannabis ETF has amassed $456.3 million in its asset base while trading in an average daily volume of $3.5 million shares. AdvisorShares Pure US Cannabis ETF charges 80 bps in annual fees.
Shipping
The dry bulk shipping market suffered a major slump triggered by the lockdowns in China and concerns over the country’s property market. Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) has declined 68%. It is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule (read: 5 Niche ETFs That Were in Green Last Week).
Breakwave Dry Bulk Shipping ETF has accumulated about $37.1 million in AUM and trades in a good volume of about 285,000 shares per day on average. It charges a higher annual fee of 3.50%.