Oil stocks soared in 2022, so it’s no surprise that funds that track the energy sector were the winners on Wall Street this year. But the best fund of the year is surprising: 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 Morningstar Direct data. The fund has large holdings in Turkish financial giant Akbank, Istanbul-based retailer Bim and the parent company of Turkish Airlines.
Turkey has been hit hard by inflation, just like the rest of the world, and its currency, the lira, has plunged against the US dollar and other leading world currencies.
So why the big wins?
Turkey’s stock market has prospered because the country is doing something most others aren’t: its central bank has been cutting interest rates to boost consumer spending. Turkish President Recep Tayyip Erdogan wants to keep rates super low. He has even fired several central bankers in recent years who refused to lower rates.
The Turkish economy has slowed down recently due to rising unemployment, but the instability has not affected Turkish stocks. The iShares Turkey ETF has also benefited from rising energy prices, with the Tüpraş refinery being one of the top holdings.
Other US and international oil funds and ETFs also topped 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 indices.)
United States 12 Months Natural Gas
(UNL)SPDR Power Selection Sector
(XLE) and various oil/energy funds managed by major investment firms such as Fidelity, Vanguard and BlackRock’s
(BLACK) iShares are up between 50% and 80% on the year.
In this difficult year for stocks, there were significantly more losers than winners in the world of mutual funds and ETFs in 2022. The SPDR S&P 500 ETF
(TO SPY) and Invesco QQQ
(QQQ)which track the S&P 500 and Nasdaq 100, were down 19% and 31% respectively.
But no fund was hit harder than ETFs with exposure to Russia.
Most funds with investments in major Russian companies have liquidated or suspended trading 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 cut off ties with Moscow and Russian companies.
Investments in Russia ETFs from iShares, VanEck and Voya were all but wiped out.
The carnage in cryptocurrency also hit several funds hard. Bitcoin prices were crashing even before the collapse of the former crypto unicorn FTX. But the shocking demise of Sam Bankman-Fried’s company sent more shock waves through the entire industry.
Funds from Osprey, Grayscale, VanEck (again), Global X, Bitwise, First Trust, Invesco, and many other institutional investment firms are down more than 70% in 2022.
Other funds that were once in style were also hit hard this year.
Several of the Ark ETFs managed by Cathie Wood, which had significant exposure to Tesla
(TSLA), coin baseZoom
(ROKÚ) and other momentum tech stocks that fell precipitously in 2022, were among the biggest losers of funds.
Numerous funds focused on cannabis stocks also, ahem, went to the pot this year. AdvisorShares, Global X and Amplify cannabis ETFs all fell more than 60%. Although more states are legalizing recreational and medicinal weed, the intense competition in the business makes it difficult for cannabis companies to turn a profit.