Best and Worst Performing ETFs of the Year

September 30, 2022

Few exchange-traded funds are bucking this year’s broad downturn in financial markets. With stocks and bonds in bear markets, there have been few places for investors to hide. 

Three quarters into 2022, the S&P 500 is down by 23% (including dividends). If the year were to end here, it would be the worst performance for the index since 2008, when it lost 37% and the second-worst since 1974, when it lost 26.5%. 

Bonds, which typically buffer portfolios in years in which stocks tumble, haven’t offered that protection this year. The Bloomberg U.S. Aggregate Bond Index lost 14.3% in the year-to-date period through September, a historic crash by bond market standards. 

The damage goes back to the time when George Washington was president, according to Santa Clara University business professor Edward McQuarrie. He told the New York Times that 2022 is so far the worst year in his bond charts that go back to 1794. 

With that context in hand, it’s easy to understand why out of the 3,000 U.S.-listed ETFs on the market, a mere 5% of them have delivered positive returns this year. 

Of those, the vast majority are commodity-related ETFs, and in particular, energy-related ETFs. 

Energy Outperformers  

Natural gas, key for heating and electricity generation, soared this year after Russia, the world’s No. 2 producer, invaded Ukraine. The U.S. ramped up exports to satisfy demand from overseas buyers who are scrambling for supplies after Russia cut back gas flows to Europe.

The U.S. became the world’s largest exporter of liquefied natural gas in the first half of 2022, according to CEDIGAZ, a supplier of news and information on the gas industry. 

Prices for natural gas in the U.S. have jumped 85% so far this year, pushing ETFs like the United States Natural Gas Fund (UNG), the United States 12 Month Natural Gas Fund (UNL) and the iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (GAZ) higher by similar amounts.  

While natural gas has largely maintained its gains for the year, oil, the other big energy commodity, has backtracked. 

WTI crude oil prices climbed as much as 64.5% at their peak, but were up a relatively modest 6% by the end of the third quarter. 

That’s weighed on oil-futures-tracking ETFs like the United States Oil Fund (USO), but the fund is still up a solid 20% this year thanks to positive yields from rolling futures contracts in a backwardated market.  

Meanwhile, energy stock ETFs have performed somewhere in the middle. The Energy Select Sector SPDR Fund (XLE) rallied 35% so far this year. XLE tracks a market-cap-weighted basket of energy stocks within the S&P 500.  

Energy is the only stock market sector in the green through the end of the third quarter. 

Tech Tanks  

The reverse image of this year’s gains in energy stocks are the losses in technology stocks. The tech-heavy Invesco QQQ Trust (QQQ) fell by nearly 32%, while the Technology Select Sector SPDR Fund (XLK) sank 31% through the end of September. 

Megacap tech stocks like Apple and Microsoft have been particularly vulnerable to the surge in interest rates this year as investors put a discount on growth and future earnings. But as highly profitable, dominant companies with few negatives to point to on a fundamental basis, those companies have declined less than smaller tech stocks, limiting the losses for QQQ and XLK.  

ETFs tied to more speculative, unprofitable segments of the tech sector were hammered much harder.  

That includes all of the blockchain-focused ETFs, like the Viridi Bitcoin Miners ETF (RIGZ) and the VanEck Digital Transformation ETF (DAPP), both down more than 73%. 

Or even the ARK Innovation ETF (ARKK) and the Direxion Moonshot Innovators ETF (MOON), each down more than 50% year to date. 

Anything that was hot and overvalued in 2021, including meme stocks (Roundhill Meme ETF [MEME]) and SPACs (AXS de-Spac ETF[(DSPC]) has been walloped in 2022.  

For a full list of this year’s best- and worst-performing ETFs, see the tables below: 

 
Best-Performing ETFs Of The Year (ex. leveraged/inverse)

Fund Ticker YTD Return
United States Natural Gas Fund LP UNG  +89.75%
United States 12 Month Natural Gas Fund LP UNL  +88.90%
iPath Series B Bloomberg Natural Gas Subindex Total Return ETN GAZ  +87.46%
Simplify Interest Rate Hedge ETF PFIX  +78.34%
iPath Series B Bloomberg Energy Subindex Total Return ETN JJE  +52.12%
Invesco Dynamic Energy Exploration & Production ETF PXE  +45.67%
KFA Mount Lucas Index Strategy ETF KMLM  +44.94%
ELEMENTS Linked to the Rogers International Commodity Index - Energy To Return RJN  +44.70%
iShares U.S. Oil & Gas Exploration & Production ETF IEO  +40.21%
First Trust Natural Gas ETF FCG  +35.85%
Fidelity MSCI Energy Index ETF FENY  +35.69%
Vanguard Energy ETF VDE  +35.58%
iShares U.S. Energy ETF IYE  +35.22%
Credit Suisse S&P MLP Index ETN MLPO  +34.96%
Energy Select Sector SPDR Fund XLE  +34.88%
Invesco DB Energy Fund DBE  +34.84%
John Hancock Multifactor Energy ETF JHME  +34.25%
United States Brent Oil Fund LP BNO  +33.67%
First Trust Energy AlphaDEX Fund FXN  +33.51%
Advocate Rising Rate Hedge ETF RRH  +32.85%

Source: Bloomberg. Data measures total returns for the year-to-date period through Sept. 29, 2022 

 

Worst-Performing ETFs Of The Year (ex. leveraged/inverse)

Fund Ticker YTD Return
Viridi Bitcoin Miners ETF RIGZ  -73.63%
Advisorshares Poseidon Dynamic Cannabis ETF PSDN  -73.55%
VanEck Digital Transformation ETF DAPP  -73.30%
Global X Blockchain ETF BKCH  -72.95%
Bitwise Crypto Industry Innovators ETF BITQ  -69.63%
Breakwave Dry Bulk Shipping ETF BDRY  -69.62%
First Trust SkyBridge Crypto Industry and Digital Economy ETF CRPT  -68.45%
Invesco Alerian Galaxy Crypto Economy ETF SATO  -68.39%
AdvisorShares Pure Cannabis ETF YOLO  -67.58%
The Cannabis ETF THCX  -66.98%
Defiance Digital Revolution ETF NFTZ  -66.18%
AXS de-Spac ETF DSPC  -65.91%
Global X Blockchain & Bitcoin Strategy ETF BITS  -65.62%
AdvisorShares Pure US Cannabis ETF MSOS  -65.49%
ETFMG US Alternative Harvest ETF MJUS  -63.51%
ARK Fintech Innovation ETF ARKF  -62.37%
ARK Next Generation Internet ETF ARKW  -61.40%
Vaneck Bitcoin Strategy ETF XBTF  -60.29%
ARK Innovation ETF ARKK  -60.04%
Global X Cannabis ETF POTX  -59.57%

Source: Bloomberg. Data measures total returns for the year-to-date period through Sept. 29, 2022 

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