Oil funds and a Turkey ETF were market winners in 2022, but Russia and cryptocurrency fell


New York
CNN

Oil stocks are set to soar in 2022, so it’s no surprise that funds that track the energy sector have been winners on Wall Street this year. But the best fund of the year is surprising: it invests in several companies based in Turkey.

The iShares MSCI Turkey exchange-traded fund had more than doubled as of Dec. 19, according to data from Morningstar Direct. The fund has large 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 cutting interest rates to prop up consumer spending. Turkish President Recep Tayyip Erdogan wants to keep rates very low. He has even fired several central bankers in recent 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 seen a rise in higher energy prices, with the Tüpraş refinery a top holding.

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 huge bets on stock indexes.)

The U.S. 12 Month Natural Gas ( UNL ), Energy Select Sector SPDR ( XLE ), and several oil/energy funds managed by major investment firms such as Fidelity, Vanguard and BlackRock’s ( BLK ) iShares are up between 50% and 80% % for the course.

In a tough year for stocks, there were far more losers than winners in the world of mutual funds and ETFs in 2022. The SPDR S&P 500 ETF ( SPY ) and Invesco QQQ ( QQQ ), which track the S&P 500 and the 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 liquidated or halted trading after 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 ties with Moscow and Russian companies.

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

The cryptocurrency carnage also hit several funds hard. Bitcoin prices were falling even before the collapse of former crypto unicorn FTX. But the stunning demise of Sam Bankman-Fried’s company sent new shock waves across the industry.

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

Falling bitcoin prices and FTX bankruptcy have decimated crypto ETFs in 2022.

Other funds that were once in vogue were also hit hard this year.

Several of Cathie Wood’s Ark ETFs, which had significant exposure to Tesla (TSLA), Coinbase, Zoom (ZM), Roku (ROKU) and other momentum tech stocks that have fallen precipitously in 2022, were among the biggest bottom losers.

Numerous funds focused on cannabis stocks also, ahem, went to pot this year. Cannabis ETFs from AdvisorShares, Global X and Amplify fell more than 60%. Even as more states legalize recreational and medicinal weed, intense competition in the business makes it difficult for cannabis companies to turn a profit.

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