Bitcoin ETFs certainly failed at being a store of value — and turned out to be big losers this year so far instead. But at least they are not the absolutely worst asset you could buy.
Shares of the largest Bitcoin ETF, ProShares Bitcoin Strategy, are down a crushing 60% this year. That's much worse than the more than 20% drop in the S&P 500. Bitcoin ETFs, though, at least outperformed the disaster that's been Russia ETFs.
The iShares MSCI Russia ETF is the worst place in all of the ETF universe you could have put your money, says an analysis by Morningstar's head ETF researcher Ben Johnson. It's down 99.8% this year.
And as a group, Russia ETFs have crashed in epic proportions. It's fairly rare for a major class of ETF to lose all its value. And yet, the VanEck Russia ETF is down nearly 99% and so is the VanEck Russia Small-Cap ETF. All three of the year's worst non-leveraged ETFs so far are Russia related.
"Russian focused ETFs ceased to trade and the securities inside became worthless," said Todd Rosenbluth, head of research at VettaFi.
Bitcoin ETFs Weren't The Real Inflation Hedge
Coming into the year, Bitcoin and cryptocurrency ETFs looked like no-brainer bets. With inflation set to spiral higher, Bitcoin fans saw the cryptocurrency as a safe haven. But that theory failed miserably.
Wreckage among Bitcoin ETFs is devastating. The Viridi Bitcoin Miners ETF is down more than 76% this year, Morningstar says. That makes it the fourth-worst non-leveraged ETF this year in Morningstar's database. And it's followed closely by a parade of losing Bitcoin-related plays. VanEck Digital Transformation is down 75% and Global X Blockchain ETF is off 74%.
Another type of ETF emerged as the real inflation hedge: energy. All 10 of the year's top non-leveraged ETFs and related exchange traded notes this year are energy plays, Johnson found. Leading the charge is United States 12 Month Natural Gas up 93% and United States Natural Gas, up 83%.
"Energy ETFs protected investor portfolios like no other in 2022 in an inflationary environment," Rosenbluth said. "Most investors started 2022 with limited exposure to commodity ETFs and a modest weighting to energy stocks. But those that added to such positions were rewarded."
Russia ETFs Throw A Curveball
No matter how disappointing cryptocurrency ETFs have been, though, Russian ETFs have been much worse.
Luckily, much of the pain has been contained to Russia ETFs alone. The leading emerging markets ETFs that used to include Russia have cast the war-torn nation out.
To be sure, the $20 billion-in-assets iShares MSCI Emerging Markets ETF is down nearly 29% this year. The hit is due to a heavy 25% exposure to financial firms, says ETF.com. Many banks overseas are struggling as a strong dollar pulls capital flows to the U.S. Additionally, a more than 20% exposure to technology stocks isn't helping emerging markets either. The top holding in the ETF, at nearly 6%, is Taiwan Semiconductor Manufacturing, a leading chipmaker. But its shares are down nearly 40% as the world works through a glut of many types of computer chips.
But at least there's a roughly 5% exposure to energy. And there are no Russian stocks. The ETF's top exposure is to Hong Kong, at 26%, followed by Taiwan and India at roughly 14% each. And there's no major Bitcoin exposure either.
"Thankfully for most investors focused on emerging markets, Russia had previously shrunk to a relatively small weight compared to China, India and Taiwan, cushioning the blow," Rosenbluth said.
Best And Worst Non-Leveraged ETFs This Year So Far
Russia is even worse than Bitcoin ETFs
| Name | Ticker | Year to date return |
|---|---|---|
| iShares MSCI Russia | -99.8% | |
| VanEck Russia | -98.7 | |
| VanEck Russia Small-Cap | -98.3 | |
| Viridi Bitcoin Miners | -76.4 | |
| VanEck Digital Transformation | -75.0 | |
| Global X Blockchain | -74.4 | |
| Bitwise Crypto Industry Innovators | -71.1 | |
| AdvisorShares Poseidon Dynamic Cnnbs | -71.0 | |
| Invesco Alerian Galaxy Crypto Eco | -70.4 | |
| Breakwave Dry Bulk Shipping | -68.8 | |
| BEST | ||
| United States 12 Month Natural Gas | 93.2 | |
| United States Natural Gas | 83.3 | |
| Simplify Interest Rate Hedge | 82.3 | |
| iPath Bloomberg Energy SubTR ETN | 82.1 | |
| iPath Bloomberg Natural Gas SubTR ETN | 81.7 | |
| Invesco Dynamic Engy Explr & Prdtn ETF | 61.6 | |
| iPath B Bloomberg Engy Ttl Ret ETN | 59.8 | |
| Elements Rogers Intl Cmdty Energy TR ETN | 56.4 | |
| iShares US Oil & Gas Explor & Prod | 54.7 | |
| First Trust Natural Gas | 49.6 |
Source: Morningstar
Follow Matt Krantz on Twitter @mattkrantz
