Following poor revenue disclosures, volatility and major sell-offs, equity faced a slump in the second half of 2018, causing fixed income ETFs to spike as investors required relief from significant loses. 17 European bond ETFs now have over a £1bn in Assets Under Management, according to JustETF. Equity ETFs were facing significant outflows week after week in Q4 with FTSE 100 and S&P 250 falling significantly after October.
Here are some of Europe’s 2018 best and worst performers for equity and fixed income ETFs, according to available data on JustETF.
Out of the 174 European equity ETFs available on justETF.com, only 10 ETFs produced a positive returns for the year. The larger sized funds that comprise the small range of positive performances include the iShares STOXX Europe 600 Oil & Gas UCITS ETF, iShares STOXX Europe 600 Health Care UCITS ETF and SPDR MSCI Europe Energy UCITS ETF.
The top three performing ETFs were in the Utilities sector. SPDR MSCI Europe Utilities ETF, Amundi ETF MSCI Europe Utilities UCITS ETF and Xtrackers STOCC Europe 600 Utilities UCITS ETF produced returns for 2018 of 4.59 per cent, 4.31 per cent and 3.18 per cent, respectively.
At the other end of the table, there was a noticeable trend as to what didn’t have a successful 2018. Predominantly Bank and Small Cap ETFs comprised some of the worst performing equity ETFs in Europe. Invesco Euro STOXX Optimised Banks UCITS ETF and iShares Euro Banks 30-15 UCITS ETF produced the heaviest losses, just sitting either side of -30 per cent with iShares’ ETF having a significantly large £1.5bn in AUM.
The third worst performer was iShares STOXX Europe 600 Automobiles and Parts UCITS ETF which produced returns of -25.51 per cent. The ETF’s holdings include leading car producers such as BMW, Peugeot and Volkswagen which all saw a drop in their share prices in 2018.
As expected having lower risk, a much larger portion of bond ETFs produced positive returns for last year with 30 out of the available 55 ETFs had a positive performance.
The iShares Euro Government Bond 20yr Target Duration UCITS ETF leads with the highest one-year returns of 6.33 per cent but also carrying the upper range of the volatility of 9.42 per cent. Second in returns was another product from iShares, the iShares Euro Government Bond 15-30yr UCITS ETF with 5.18 per cent.
Ironically, the worst performing fixed income products were the high yield bond ETFs. Additionally corporate bond ETFs were a regular feature for products which produced a negative return. The Lyxor BofAml Euro High Yield Ex-Financial Bond UCITS ETF had the worst one-year return of -2.75 per cent, significantly lower than equity’s worst performer with losses over 30 per cent. The next two biggest losers were the SPDR Barclays Euro High Yield Bond UCITS ETF and the Xtrackers EUR High Yield Corporate Bond UCITS ETF, producing loses of 2.4 per cent and 2.13 per cent respectively.
Now we are a few days in to 2019, equities have seen its usual New Year’s spike as investors go back to work. However big names like Facebook and Apple have had a slippery start to the year having faced major sell-offs due to not meeting targets. Maybe 2018 wasn’t the end of equity ETFs’ struggle.
*Figures updated 31/01/2019*