Oil funds and a Turkish ETF were the 2022 market winners, but Russia and crypto fell

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New York CNN—

Oil stocks have soared in 2022, so its unsurprising funds that track the energy sector have been Wall Street’s winners this year. But the best fund of the year is surprising: it invests in various 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 significant 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 fallen against the US dollar and other major world currencies.

So why the big wins?

Turkey’s stock market has boomed because the country is doing something most others aren’t: its central bank has cut interest rates to support consumer spending. Turkish President Recep Tayyip Erdogan wants to keep interest rates very low. He even fired several central bankers in recent years who refused to cut rates.

Turkey’s economy has recently slowed due to rising unemployment, but the instability has not hurt Turkish stocks. The iShares Turkey ETF also benefited from rising energy prices, with Tpra Refinery being one of the top holdings.

Other U.S. and international oil funds and ETFs also topped the Morningstar Directs 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 outsized bets on stock indices.)

The US 12 Month Natural Gas (UNL), Energy Select Sector SPDR (XLE) and several oil/energy funds managed by leading investment firms like Fidelity, Vanguard and BlackRocks (BLK) iShares are all up between 50% and 80% for the year.

In this tough year for stocks, there have been 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 trail the S&P 500 and Nasdaq 100, were down 19% and 31% respectively.

But no fund has been hit harder than ETFs with exposure to Russia.

Most of the funds invested in Russia’s biggest companies were liquidated or ceased operations following 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 sever their ties with Moscow and Russian companies.

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

The cryptocurrency carnage has also hit several funds hard. Bitcoin prices were plunging even before the collapse of former crypto unicorn FTX. But the stunning demise of the Sam Bankman-Frieds company has sent new shockwaves throughout the industry.

Funds from Osprey, Grayscale, VanEck (again), Global X, Bitwise, First Trust, Invesco and many other institutional investment firms have all fallen over 70% in 2022.

Other once-fashionable funds have also been 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 buoyant tech stocks that fell precipitously in 2022, were among the biggest. losers.

Many cannabis stock-focused funds have also, ahem, potshot this year. Cannabis ETFs from AdvisorShares, Global X and Amplify all plunged more than 60%. Even as more states legalize recreational and medicinal weed, intense competition in the industry makes it difficult for cannabis companies to turn a profit.

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