NEW YORK (Reuters) – Big bets on major US technology companies and emerging cryptocurrencies boosted top-performing US mutual funds and exchange-traded funds as the coronavirus pandemic boosted world markets, while funds betting on oil and gas companies fell nearly 100 has. according to data from fundraiser Morningstar.
The year, like few others, was a challenge for the $ 21.3 trillion investment fund and $ 4.4 trillion ETF. US equities fell in March before a return of more than 60%, while bond yields hung near record lows for much of the year after unprecedented moves by the Federal Reserve to halt financial markets and interest rates to keep low.
Those who played risk assets were generally rewarded. The best fund of the year, Grayscale Ethereum Trust, which owns ethereum, the second-largest cryptocurrency in the world after bitcoin, rose 333.7% for the year to 9 December, according to Morningstar.
The fund’s gains came from a small investor led by cryptocurrencies, which raised the total assets invested in cryptocurrencies to a record $ 15 billion, from $ 2.57 billion at the end of 2019, according to digital asset manager CoinShares.
Tech was another clear winner of the pandemic when people moved from offices to work-from-home and did business via video call while ordering goods online. The Bank of Montreal MicroSectors FANG + 3X Leveraged ETN and the Bank of Montreal MicroSectors FANG + 2X Leveraged ETN – both using leveraged financing to invest in so-called FANG technology stocks such as Facebook Inc and Netflix Inc – have 301.9% and 201, 9% returns delivered. respectively, making them the second and third best funds for the year to December 9th.
Among actively managed non-leveraged funds, the ARK Innovation ETF achieved the best overall returns with a gain of 143.8%, followed by a 141.4% increase in the US Beacon ARK Transformational Innovation Fund and a 139.7% increase in the Morgan Stanley Institutional Discovery Fund.
Nearly all of the top ten U.S. equity funds have concentrated portfolios that own less than 50 stocks and in some cases have more than 10% of their assets in the shares of a single company, according to Morningstar.
These big bets helped bear fruit during a broad market march that pushed several asset classes near overall highs and increased the S&P 500 by more than 65% since the lows it reached in mid-March, when a large part of the US economy came to a standstill. prevents the spread of the coronavirus.
“When fund management swings to the fences with big bets on a handful of growth names, they will hit home runs, but it can also break out,” said Todd Rosenbluth, head of mutual funds and mutual fund research at CFRA.
The worst performing funds, meanwhile, were funds that cost a long bet on oil and gas supplies, which fell this year from a collapse in demand that, for the first time in history, a short-term negative in April made.
The Direxion Daily S&P Oil & Gas E&P 2X ETF fell 97.3% for the year, followed by the Direxion Daily Junior Gold Miners Bear 2X ETF, which tumbled 95.5% for the year.
Among actively managed equity funds, the Highland Small Cap Equity fund achieved the worst return of the year with a decline of 51.1%.
The top-performing interim core fund of the year, meanwhile, was the American Funds Strategic Bond fund with a gain of 17.7%. According to Morningstar, the fund has about 43% of its portfolio in Treasury, which doubles its weight as its benchmark index. The performance was about 18 percentage points above the year’s worst performance in the category, the Putnam Mortgage Securities A fund, which has about half of its portfolio in cash and less than 1% of its assets in the treasury.
Reporting by David Randall; Edited by Megan Davies and Andrea Ricci