ETFs: The best and worst performers over the past 12 months

Find out which ETFs performed the best – and worst – over the past year and why you may want to think twice about chasing last year’s winners.

What sort of return do you think the best-performing ETF of the past year achieved? If you guessed anything less than 90% you would be wrong! According to the 2020 Stockspot ETF Report the ETFS Physical Palladium (ETPMPD) returned an impressive 90.2% in the 12 months to March 2020, making it the best-performing ETF over the past year. In dollar terms that means if you had invested $5000 in this ETF last year your investment would have been worth $9,510 at the end of March 2020.

This is actually the second year in a row ETPMPD, which tracks the performance of the price of Palladium, took the top spot. The return for 2019 was 52.4%, which might be lower than this year but is still a very strong result. Over the past five years the total return of the fund has been a staggering 363% according to Stockspot. So if you had invested $5000 in the ETF five years ago you’d have $23,150!

If you’re not familiar with palladium it is a rare metal “used in a range of activities such as in auto catalysts for automobiles (to reduce carbon emissions), dental fillings, and jewellery” explained Stockspot’s Marc Jocum.

“The strong growth in the metal has come from consistent demand increases for carbon-efficient automobile use (such as electric vehicles) particularly in China, and tighter supply constraints including large producers halting production in response to COVID-19,” the report stated.

It was definitely a great year for precious metals. If you take a look at the table below you’ll see that the remaining funds rounding out the top performers all offer investors exposure to precious metals.

“Gold was a strong performing sector, as investors piled money into the precious yellow metal on the back of uncertainty surrounding the coronavirus and record low interest rates. The precious yellow metal can give investors diversification benefits as gold is uncorrelated to traditional assets like shares,” said Mr Jocum.

In second and third place were ETFS Physical Gold (GOLD) and Perth Mint Gold (PMGOLD) with returns of 43.1% and 42.9% respectively. Mr Jocum pointed out that physical gold outperformed gold mining companies which also delivered a strong return of 23% for the past year putting the VanEck Vectors Gold Miners ETF (GDX) in fifth spot.

Coming in at fourth place was the ETFS Precious Metals Basket (ETPMPM) which delivered a return of 41.9% over the year. As the name suggests it holds a basket of metals such as gold, palladium, silver and platinum.

Best performers can turn into worst performers

While the returns of the top performers may sound appealing it is always important to remember that past performance is no guarantee of future returns – something highlighted in the table below.

As you can see only one of the five top ETFs of 2019 retained its position this year while the remaining four fell down the leaderboard. For example VanEck Vectors Australian Property ETF (MVA) which was the second best performer in 2019 ranked 203rd this year making it one of the worst performers of 2020. “Its fall from grace into the bottom performers demonstrates the dangers of buying last year’s winners,” warned Mr Jocum. “It is often best to stick with a diversified portfolio which holds the entire market including all sectors.”

The worst-performing ETFs

While precious metals ETFs were the winners over the past year there’s a mixed bag of ETFs in the worst performers list.

“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,” stated Mr Jocum.

“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%.” This made them the two worst performers over the year.

The third worst performer was the K2 Australian Small Cap Fund (KSM) which lost 33.4%. It was followed by two property ETFs – the SPDR S&P/ASX 200 Listed Property Fund (SLF) and VanEck Vectors Australian Property ETF (MVA) which were both down over 32% for the year.

“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,” explained Mr Jocum.

This article was reviewed by Editorial Campaigns Manager Maria Bekiaris before it was published as part of our fact-checking process.

Main image source: Juergen Priewe (Shutterstock)

About Effie Zahos

Canstar’s Editor-at-Large, Effie Zahos, has more than two decades of experience helping Aussies make the most of their money. Prior to joining Canstar, Effie was the editor of Money Magazine, having helped establish it in 1999. She is an author and one of Australia’s leading personal finance commentators, appearing regularly on TV and radio.

This article was reviewed by Editorial Campaigns Manager Maria Bekiaris before it was published as part of our fact-checking process.

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