Oil and Turkish stocks were 2022 market winners. Russia funds and crypto tanked
Oil stocks skyrocketed in 2022, so it’s no surprise funds that track the energy sector were Wall Street winners this year. But the top fund of the year is a surprising one: It invests in a variety of companies based in Turkey.
The iShares MSCI Turkey exchange-traded fund had more than doubled as of December 19, according to data from Morningstar Direct. The fund has big stakes in Turkish financial giant Akbank, Istanbul-based retailer Bim and the parent company of Turkish Airlines.
Turkey has been hit hard by inflation, like the rest of the world, and its currency, the lira, has plummeted against the US dollar and other leading global currencies.
So why the big gains?
Turkey’s stock market thrived because the country is doing something most others aren’t: Its central bank has been slashing interest rates to prop up consumer spending. Turkish President Recep Tayyip Erdogan wants to keep rates super low. He has even fired several central bankers in the past few years who refused to lower rates.
The Turkish economy has slowed recently as unemployment has risen, but the instability has not hurt Turkish stocks. The iShares Turkey ETF has also had a lift from higher energy prices, as refinery Tüpraş is a top holding.
Other US and international oil funds and ETFs were also at the top of Morningstar Direct’s list. (Morningstar Direct provided CNN Business with a ranking of the best and worst mutual funds and ETFs for 2022, excluding so-called leveraged funds that make outsized bets on stock market indexes.)
The United States 12 Month Natural Gas
(UNL), Energy Select Sector SPDR
(XLE) and several oil/energy funds run by top investing firms like Fidelity, Vanguard and BlackRock’s
(BLK) iShares are all up between 50% and 80% for the year.
In this rocky year for stocks, there were significantly more losers than winners in the mutual fund and ETF world in 2022. The SPDR S&P 500 ETF
(SPY) and Invesco QQQ
(QQQ), which track the S&P 500 and Nasdaq 100, were down 19% and 31% respectively.
But no funds were hit harder than ETFs with exposure to Russia.
Most funds with investments in top Russian companies either liquidated or halted trading following Vladimir Putin’s decision to invade Ukraine in late February, an act that essentially forced the United States, Europe and rest of the Western world to cut ties with Moscow and Russian businesses.
Investments in Russia ETFs from iShares, VanEck and Voya were pretty much wiped out.
The carnage in cryptocurrencies also hit several funds hard. Bitcoin prices were plunging even before the collapse of former crypto unicorn FTX. But the stunning demise of Sam Bankman-Fried’s company sent further shock waves throughout the industry.
Funds from Osprey, Grayscale, VanEck (again), Global X, Bitwise, First Trust, Invesco and many other institutional investment firms all tumbled more than 70% in 2022.
Other once-trendy funds were also hit hard this year.
Several of the Ark ETFs run by Cathie Wood, which had significant exposure to Tesla
(TSLA), Coinbase, Zoom
(ROKU) and other momentum tech stocks that have dropped precipitously in 2022, were among the biggest fund losers.
Numerous funds focusing on cannabis stocks also, ahem, went to pot this year. Cannabis ETFs from AdvisorShares, Global X and Amplify all plunged more than 60%. Even though more states are legalizing recreational and medicinal weed, intense competition in the business is making it difficult for cannabis companies to generate profits.