The worst ETF performers are from niche products and particular market sectors rather than major share markets or asset classes. Active ETFs continued to be amongst the worst performers. The average performance of a non-active ETF was -2.6%, outperforming the average active ETF which returned -6.6% for the year.
ETFs that aimed to track the oil price or companies exposed to the energy industry were hit hard over the last year, as oil prices plummeted on the back of a global demand glut and supply constraints. The Betashares Crude Oil Index ETF-Currency Hedged (Synthetic) (OOO) was down almost 65% whereas the BetaShares Global Energy Companies ETF – Currency Hedged (FUEL) lost 47%.
K2 once again proved to be one of the worst performers with the K2 Australian Small Cap Fund (KSM) strategy returning -33.4%. This is the 2nd year in a row they make the bottom 5, again showing how active managers underperform the market.
Over the past year KSM underperformed a broad based index like the Vanguard Australian Shares Index ETF (VAS) by 20%. Considering K2 had on average 30% of its portfolio in cash over the past year, investors should consider why they are paying K2 fees of over 2% p.a.
Property ETFs were hit hard this year as shopping centres and commercial property faced mounting challenges in light of the uncertain economic impact of COVID-19 including lack of retail spending and landlords waiving rents. The SPDR S&P/ASX 200 Listed Property Fund (SLF) and VanEck Vectors Australian Property ETF (MVA) were down over 32% for the year.
Interestingly, MVA was in the top 5 performers for 2019. It’s fall from grace into the bottom performers demonstrates the dangers of buying last year’s winners.
It is often best to stick with a diversified portfolio which holds the entire market including all sectors. Four of the 5 top ETFs of 2019 are now amongst the worst performers of 2020.
|ASX Code||ETF Name||Mar’19 Rank||Mar’20 Rank||Change|
|ETPMPD||ETFS Physical Palladium||1st||1st||0|
|MVA||VanEck Vectors Australian Property ETF||2nd||203rd||-201|
|QRE||BetaShares S&P/ASX 200 Resources Sector ETF||3rd||193rd||-190|
|OZR||SPDR S&P/ASX 200 Resource Fund||4th||187th||-183|
|VAP||Vanguard Australian Property Securities Index ETF||5th||202nd||-197|
|ASX Code||ETF Name||1 Year Total Return|
|OOO||Betashares Crude Oil Index ETF-Currency Hedged (Synthetic)||-64.6%|
|FUEL||BetaShares Global Energy Companies ETF – Currency Hedged||-46.7%|
|KSM||K2 Australian Small Cap Fund (Hedge Fund)||-33.4%|
|SLF||SPDR S&P/ASX 200 Listed Property Fund||-32.3%|
|MVA||VanEck Vectors Australian Property ETF||-32.2%|
Stockspot’s focus on broad market low cost index funds instead of active ETFs or niche sector ETFs has helped our clients avoid all of the worst performing ETFs.
See what the Best ETF Performers were over the last year.