Interactive Investor

The 20 best and worst-performing funds of 2022

21st December 2022 09:35

by Sam Benstead from interactive investor

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This year produced some big fund winners and losers. Sam Benstead digs into the data.  

Darts hit board

The best-performing funds in 2022 nearly doubled in value, while the worst fell by as much as 72%, as stock markets were rocked by rising interest rates, inflation and geopolitical tensions.

The FTSE 100 rose 3%, while the MSCI World and S&P 500 indices fell around 10% this year (data to 17 December) – but the relatively flat index returns, measured in sterling, disguise the divergent returns of different funds.

Top of the charts were exchange-traded funds (ETFs) tracking Turkish stocks. The iShares MSCI Turkey Ucits ETF and the HSBC MSCI Turkey ETF both nearly doubled in value.

This will come as a surprising result to many, as the main headlines reaching us from Turkey tend to revolve around unorthodox monetary policy and runaway inflation.

Falling interest rates and retail investors rushing into stocks to help offset the corrosive effects of inflation on their bank balances are the drivers of the strong performance this year of Turkish shares (150% return in local currency and 116% in sterling).

Bloomberg reports that the number of equity trading accounts opened by retail investors in the country rose by 32% to 3.1 million, and foreign investors turned less bearish and picked up cheap stocks.

Energy funds then dominated the best-performing list, with ETFs focusing on US energy companies top of the charts: the iShares S&P 500 Energy Sector Ucits ETF, Xtrackers MSCI USA Energy Ucits ETF, and SSFA SPDR S&P US Energy Select Sector returned about 75% each.

Global energy funds delivered slightly lower returns, at around 50%. The top funds and ETFs were: Xtrackers MSCI World Energy UCITS ETF, SSGA SPDR MSCI World Energy UCITS ETF, iShares Oil & Gas Exploration & Production UCITS ETF, BlackRock BGF World Energy, GS North America Energy & Energy Infrastructure Equity, Schroder ISF Global Energy, and Guinness Global Energy

Oil has been one of the best places to be invested this year. While the oil price is relatively flat, after spiking in March when Russian invaded Ukraine, investors have still driven up the prices of oil companies.

This is because they pay generous dividends and there has been a shift in perspective to fossil fuels, with oil companies now seen as essential for geopolitical independence, and emissions as a necessary part of the transition to clean energy.

Other top-performing funds this year include some absolute return funds, which can use financial contracts to “short” stocks and make money then they fall. They include 7IM Absolute Return Portfolio, AQR Systematic Total Return, and AQR Managed Futures.

Rounding off the top 20 are other resource-related strategies: SPDR MSCI Europe Energy ETF , JPM Natural Resources and BlackRock Natural Resources Growth & Income.

Fund / ETFReturn in 2022 (%)
iShares MSCI Turkey UCITS ETF99.49
HSBC MSCI Turkey98.84
iShares S&P 500 Energy Sector UCITS ETF74.88
Xtrackers MSCI USA Energy UCITS ETF74.53
SSGA SPDR S&P U.S. Energy Select Sector UCITS ETF74.28
Xtrackers MSCI World Energy UCITS ETF56.75
iShares Oil & Gas Exploration & Production UCITS ETF50.93
BlackRock BGF World Energy49.81
GS North America Energy & Energy Infrastructure Equity Portfolio49.02
Schroder ISF Global Energy44.04
TB Guinness Global Energy43.66
7IM Absolute Return Portfolio43.63
Guinness Global Energy42.99
AQR Systematic Total Return UCITS RAUF42.2
AQR Managed Futures UCITS RAEF34.2
7IM Income Portfolio33.78
JPM Natural Resources28.71
BlackRock Natural Resources Growth & Income27.56

Source: FE FundInfo, total return 1 January 2022 to 17 December 2022. Past performance is not a guide to future performance.

Worst funds

Funds and ETFs investing in high-growth but unproven technology stocks were the biggest losers in 2022.

These included thematic ETFs, which invested in a specific technology theme, as well as broader technology investment funds.

Bottom of the table was HAN ETC Group Digital Assets & Blockchain Equity UCITS ETF, a passive fund that buys companies involved in blockchain, which is the technology that underpins cryptocurrency networks such as Bitcoin. It fell 72% this year. Invesco CoinShares Global Blockchain UCITS, another blockchain strategy, fell 45%.

Other themes under pressure were online retail and cannabis. HAN Global Online Retail UCITS ETF USD and HAN Medical Cannabis and Wellness UCITS fell 66% and 47% respectfully.

Other big losers include Nikko AM ARK Disruptive Innovation (down 60%), which allows British investors access to the risky portfolios of ARK Invest, run by Cathie Wood. Investing in a similar style were Baillie Gifford American (-49%); Morgan Stanley US Advantage (-49%) and T Rowe Price Global Technology Equity(-49%).

Stocks where the valuation is based on future profits, rather than money made today, suffered in 2022 because of the sharp rise in interest rates. When interest rates rise, so do the yields on bonds, meaning that investors get a greater return from safer investments, such as debt issued by the UK or US government. This decreases the appeal of companies that promise profits way out into the future.

The other big theme on the losers list was Russia. Following the war, Western investors are blocked from trading shares listed in Moscow, meaning that several funds had to write down the value of their investments. These include Liontrust Russia (-59% return this year) and Fidelity Emerging Europe Middle East and Africa (-47%).

Fund/ETFReturn in 2022 (%)
HAN ETC Group Digital Assets & Blockchain Equity UCITS ETF-72.53
Schroder ISF Emerging Europe-67.07
HAN Global Online Retail UCITS ETF USD-66.02
Nikko AM ARK Disruptive Innovation-60.3
Liontrust Russia-59.19
MS INVF US Growth-53.36
Morgan Stanley Global Insight-50.37
LF Equity Income (formerly Woodford Equity Income)-50.19
T. Rowe Price Global Technology Equity-49.6
T. Rowe Price Global Technology Equity-48.82
Baillie Gifford American-48.61
Fiera Capital Europe Magna Eastern European-48.58
Morgan Stanley US Advantage-48.57
HAN Medical Cannabis and Wellness UCITS ETF-47.31
Fidelity Emerging Europe Middle East and Africa-47.14
MS INVF US Advantage-46.93
Multipartner SICAV Baron Global Advantage Equity-46.14
Invesco CoinShares Global Blockchain UCITS ETF-45.29
HANetf Purpose Enterprise Software ESG S UCITS ETF-41.34
Jupiter UK Mid Cap-40.95

Source: FE FundInfo, total return 1 January 2022 to 17 December 2022. Past performance is not a guide to future performance.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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