For richer or poorer, ETFs that made news

WHAT a year for investors. From booming commodities to crypto’s winter, 2022 was a rollercoaster ride right from the start.

Through the ups and downs, exchange-traded funds (ETFs) were a firm favourite, with almost two million Australians now putting their money into these low-cost funds.

For those who picked the winners, there were bumper rewards. And as always, there were plenty of losers too. Here are the best and worst ETFs for the 11 months to November 30.

BEST PERFORMERS

1. BetaShares Global Energy Companies ETF – Currency Hedged (FUEL). It had a healthy 47 per cent return, according to data compiled by research house Morningstar. This fund tracks the performance of global energy companies, excluding Australian companies, to give investors a diversified, low-cost exposure to the biggest and best in the sector.

2. Global X Ultra Short Nasdaq 100 Hedge Fund (SNAS). This activelymanaged EFT provides investors with negativelygeared exposure to the Nasdaq-100 Index and has returned 46 per cent.

3. BetaShares US Equities Strong Bear Hedge Fund (BBUS). This EFT seeks to profit from, or protect against, a declining US sharemarket. It is designed to generate magnified positive returns when the market goes down. The fund has returned 26 per cent.

4. VanEck Australian Resources ETF (MVR). This ETF gives investors exposure to a range of ASXlisted resources stocks and has had a 25 per cent return.

5. BetaShares’s Australian Resources Sector ETF (QRE). This fund, which is heavily weighted to mining giant BHP, has notched up a 24 per cent return.

WORST PERFORMERS

1. BetaShares Crypto Innovators ETF (CRYP). This EFT, launched a year ago, has produced a dismal negative 76 per cent return. It provides exposure to the companies building crypto mining equipment, crypto trading venues, and other key services that allow the crypto economy to thrive.

2. Cosmos Global Digital Miners Access ETF (DIGA). The EFT, which has recorded a negative 72 per cent return, was designed to provide investment returns, before fees and other costs, that tracked the performance of the Global Digital Miners Index. It delisted last month.

3. Global X Ultra Long Nasdaq 100 Hedge Fund (LNAS). This EFT aims to provide investors with geared returns that are positively related to the returns of the Nasdaq-100 Index. It has returned a negative 61 per cent.

4. Perpetual Global Innovation Share ETF (IDEA). The fund focuses on global companies that benefit from technological change and innovation. Its return is negative 41 per cent.

5. Montaka Global Extension ETF (MKAX). The fund invest in “longterm winners in attractive transforming markets when they are undervalued and offer outsized return potential”. It has produced a negative 40 per cent return.

OUTLOOK FOR 2023?

Looking ahead, Morningstar associate director for manager research, Justin Walsh, said there was a good chance energy could be in for another decent year.

“There’s still a very strong case for energy to have another good year, depending on your base case and how far valuations have gotten ahead of that,” Mr Walsh said.

For growth stocks, meanwhile, it all depends how the interest rate and inflation story plays out.

“If you think long-term rates are 1 or 2 per cent versus 4 or 5 per cent, then that has a big impact in terms of how much you discount back cash flows to get a valuation for a company,” Mr Walsh said.

“And that then has an impact in terms of the expectations of what will happen to valuations for equities.”