February 4, 2023

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Oil funds and a Turkey ETF were the market winners of 2022, but Russia and crypto tumbled

New York Eureka News Now —

Oil stocks have soared in 2022, so it’s no surprise funds that track the energy sector have been winners on Wall Street this year. But the top fund of the year is surprising: it invests in a large number of companies based in Turkey.

Exchange-traded fund iShares MSCI Turkey had more than doubled as of Dec. 19, according to data from Morningstar Direct. The fund holds large stakes in Turkish financial giant Akbank, Istanbul-based retailer Bim and the parent company of Turkish Airlines.

Turkey, like the rest of the world, has been hit hard by inflation and its currency, the lira, has plummeted against the US dollar and other leading global currencies.

So why the big wins?

Turkey’s stock market has thrived because the country is doing something most others aren’t: its central bank has cut interest rates to prop up consumer spending. Turkish President Recep Tayyip Erdogan wants to keep interest rates extremely low. He has even fired several central bankers who refused to cut interest rates in recent years.

Turkey’s economy has slowed recently as unemployment has risen, but the instability hasn’t hurt Turkish stocks. The iShares Turkey ETF also benefited from higher energy prices as Tüpraş Refinery is a top holding.

Other U.S. and international oil funds and ETFs also topped Morningstar Direct’s list. (Morningstar Direct provided Eureka News Now Business with a ranking of the best and worst mutual funds and ETFs for 2022, excluding leveraged funds that make outsized bets on stock market indexes.)

The US 12 Month Natural Gas (UNL), Energy Select Sector SPDR (XLE) and several oil/energy funds operated by leading investment firms such as Fidelity, Vanguard and BlackRock’s (BLK) iShares are all up between 50% and 80% Year.

In what was a difficult 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 have been hit harder than ETFs with exposure to Russia.

Most of the funds investing in top Russian companies were either liquidated or shut down following Vladimir Putin’s decision to invade Ukraine in late February, an act that essentially forced the United States, Europe and the rest of the Western world to sever ties to cancel Moscow and Russian companies.

Investments in Russia ETFs from iShares, VanEck and Voya have been all but wiped out.

The carnage in cryptocurrencies also hit several funds hard. Bitcoin prices were already crashing before the collapse of former crypto unicorn FTX. But the stunning demise of Sam Bankman-Fried’s company sent more shockwaves through the industry.

Funds from Osprey, Grayscale, (again) VanEck, Global X, Bitwise, First Trust, Invesco, and many other institutional investment firms all collapsed more than 70% in 2022.

Other once-trendy funds have also been hit hard this year.

Several of the Ark ETFs run by Cathie Wood, which had significant exposure to Tesla (TSLA), Coinbase, Zoom (ZM), Roku (ROKU), and other momentum tech stocks that fell sharply in 2022, were among the largest fund losers.

Numerous funds focused on cannabis stocks also went into the pot this year. Cannabis ETFs from AdvisorShares, Global X, and Amplify all plummeted more than 60%. As more states legalize recreational and medical cannabis, intense competition in the business makes it difficult for cannabis companies to turn a profit.