We analysed the returns on the worst performing ETFs in 2022. This year, the worst ETF performers are from Asian markets and niche thematic technology ETFs.
Listed below are the worst performing five ETFs in Australia (in reverse order), and the reasons why they performed so poorly in the past year.
Before you denounce these ETFs for good, remember that the performance of ETFs can change dramatically from year to year. This year’s worst performers can become next year’s best performers. This is why diversified investing is so important.
The worst Australian ETFs of 2022
5. iShares MSCI South Korea Capped Index ETF (IKO)
One year total return: -16.3%
Most Asian economies had a rough 2022, but particular country ETFs such as IKO fell more than 16% in the past year due to a combination of higher inflation and weaker economic growth.
4. iShares S&P Asia 50 ETF (IAA)
One year total return: -21.0%
Large Asian companies fell due to weaker regional performance, mainly dragged down by China, and a stronger U.S. dollar (which normally has an inverse relationship with emerging market economies).
3. iShares FTSE China Large-Cap ETF (IZZ)
One year total return: -26.8%
China was one of the worst performing global performers due to a slow down in growth, tightening regulatory policy, and weaker economic performance from adopting a zero-COVID response.
2. ETFS S&P Biotech ETF (CURE)
One year total return: -29.3%
The large amount of monetary and fiscal stimulus put pressure on the USD. This, combined with an appreciating Australian dollar, meant that the USD ETF suffered. We may see further closures in currency ETFs given they are losing money, which has already started with ETF Securities closing their U.S. Dollar ETF (ASX: ZUSD).
1. BetaShares Asia Technology Tigers ETF (ASIA)
One year total return: -32.1%
A combination of a sell-off in the broader sector and a regulatory crackdown on Chinese technology companies left ASIA to be down 32.1%. This ETF had an exceptional return in 2020/2021 demonstrating the truism: last year’s winners can become this year’s losers.
Worst Performing Australian ETFs 2022
|ETF CODE||ETF NAME||1-YEAR RETURN|
|ASIA||BetaShares Asia Technology Tigers ETF||-32.1%|
|CURE||ETFS S&P Biotech ETF||-29.3%|
|IZZ||iShares FTSE China Large-Cap ETF||-26.8%|
|IAA||iShares S&P Asia 50 ETF||-21.0%|
|IKO||iShares MSCI South Korea Capped Index ETF||-16.3%|