The past 12 months have been dismal for equities, but thematic ETFs—which seek to capture hot investing ideas like crypto and cannabis—appear to have borne the brunt of the market’s wrath. Find out which funds made our list of the 20 worst-performing ETFs of 2022.
Worst-Performing ETFs of 2022
If you factor out leveraged and inverse ETFs as well as ETFs covering Russia—which hasn’t traded since the spring—the 20 worst-performing ETFs of 2022 were almost exclusively thematic. For example, the seven worst-performing ETFs of the year all invest in cryptocurrency or crypto-related equities.
Worst-performing ETF types of 2022 include:
- Cryptocurrency ETFs
- SPAC ETFs
- Marijuana ETFs
- Psychedelics ETFs
- ARK Innovation ETFs
Crypto ETFs Lead the Worst Performers of 2022
The Viridi Bitcoin Miners ETF (RIGZ) led the decline, retreating 87% through Dec. 27. The actively managed ETF, which invests in the equities of bitcoin miners and semiconductor companies, and its fate is already sealed. RIGZ will see its last day of trading on Jan. 4, 2023, making it one of the first—if not the first—ETFs to close in the new year.
Bitcoin fell 65% in 2022, and it dragged down any fund with even a remote association with it. The declines range from RIGZ’s 87% drop to the 75.8% slide in the Global X Blockchain and Bitcoin Strategy ETF (BITS). Those fund range in size from less than $1 million in assets to $33.8 million.
The Volt Crypto and Equity ETF (BTCR) fell into the No. 18 spot with a decline of 67.8%. Its strategy includes an options overlay, which may have allowed for some mitigation of the category performance.
The Decline of SPACs, Marijuana and Psychedelics ETFs
Once you navigate through that first cluster of crypto-related ETFs, the eighth worst-performing ETF is the AXS De-SPAC ETF (DSPC), which fell nearly 75%.
The fund invests in publicly traded companies that are the result of a merger with a special acquisition company, and it has less than $1 million in assets. SPACs got a lot of attention during the pandemic with nine ETFs covering the space making their debut since October 2020. However, their performance has been less than inspiring, and a recent Bloomberg article notes that post-merger companies resulting from SPACs have lost a median of 70% of their value.
Marijuana ETFs claim places 9 through 11 as well as the No. 14 and 16 spots. It turns out the largest marijuana ETF was also the worst-performing of the bunch, with the $474.9 million AdvisorShares Pure US Cannabis ETF (MSOS) falling 73.7% year-to-date. The other marijuana ETFs in the worst-performer ranks fell between 68% and 73%.
The AdvisorShares Psychedelics ETF (PSIL), which focuses on psychedelic medicines and excludes marijuana, dropped 67.8%.
ARK ETFs and Other Former Highfliers Fall
Several of the worst performers in 2022 were once highfliers. Three ARK Investment ETFs made it to the bottom 20 when in other years they would have ranked near the top, with the $943 million ARK Next Generation Internet ETF (ARKW) falling 69.2%, the steepest decline of the trio. Meanwhile, the $6 billion ARK Innovation ETF (ARKK) is down 68.5% and the $657.3 million ARK Fintech Innovation ETF (ARKF) has fallen 66.5%, putting it in the No. 20 spot.
Finally, the Breakwave Dry Bulk Shipping ETF (BDRY), which was the best-performing ETF of 2021 with a 283% return, is down 67.8% this year. The fund invests in dry bulk freight futures, and China’s zero-COVID policies appear to be at least partially to blame as the country imports less iron ore and coal for its steel industry, according to FreightWaves.com.
Russia ETFs Stop Trading in 2022
Three ETFs covering Russia’s equity markets are excluded from the list simply because the funds aren’t currently trading. They have been frozen since shortly after the country’s February invasion of Ukraine and are set to be liquidated.
The 20 Worst-Performing ETFs of 2022
|Viridi Bitcoin Miners ETF||RIGZ||-87.00%|
|VanEck Digital Transformation ETF||DAPP||-85.98%|
|Bitwise Crypto Industry Innovators ETF||BITQ||-84.44%|
|First Trust SkyBridge Crypto Industry and Digital Economy ETF||CRPT||-81.48%|
|Invesco Alerian Galaxy Crypto Economy ETF||SATO||-80.43%|
|Defiance Digital Revolution ETF||NFTZ||-77.08%|
|Global X Blockchain and Bitcoin Strategy ETF||BITS||-75.83%|
|AXS De-SPAC ETF||DSPC||-74.86%|
|AdvisorShares Pure US Cannabis ETF||MSOS||-73.66%|
|AdvisorShares Pure Cannabis ETF||YOLO||-72.52%|
|The Cannabis ETF||THCX||-70.96%|
|Simplify Volt Cloud and Cybersecurity Disruption ETF||VCLO||-70.22%|
|ARK Next Generation Internet ETF||ARKW||-69.24%|
|Global X Cannabis ETF||POTX||-68.83%|
|ARK Innovation ETF||ARKK||-68.52%|
|ETFMG U.S. Alternative Harvest ETF||MJUS||-68.19%|
|AdvisorShares Psychedelics ETF||PSIL||-68.11%|
|Volt Crypto Industry and Equity ETF||BTCR||-67.84%|
|Breakwave Dry Bulk Shipping ETF||BDRY||-67.79%|
|ARK Fintech Innovation ETF||ARKF||-66.49%|
Source: FactSet; data as of Dec. 27, 2022
Contact Heather Bell at [email protected]