NEW YORK (Reuters) – High stakes on major US technology companies and new cryptocurrencies have fueled the best mutual funds and US mutual funds in a year when the coronavirus pandemic overturned global markets and funds betting on oil and gas companies fell by almost 100% , according to a Morningstar fundraiser.
The year was a challenging one, like few others for the $ 21.3 trillion mutual fund and the $ 4.4 trillion ETF industry. U.S. stocks fell more than 60% in March to return, while bond yields hung at almost record lows for most of the year after the Federal Reserve’s unprecedented steps to support financial markets and keep interest rates low.
Overall, those who played risky assets were rewarded. According to Morningstar, the best fund of the year, the Grayscale Ethereum Trust, which holds etherium, the world’s second-largest cryptocurrency after bitcoin, grew 333.7% year-over-year to Dec. 9.
According to digital asset manager CoinShares, the fund made a profit during a cryptocurrency rally led by retail investors, bringing total cryptocurrency assets to a record $ 15 billion from $ 2.57 billion at the end of 2019.
Technology was another clear winner from the pandemic, as people moved from offices to work from home and ran businesses through video calling, ordering goods online. Bank of Montreal MicroSectors FANG + 3X with ETN leverage and Bank of Montreal MicroSectors FANG + 2X with ETN leverage – both of which use leverage to invest in so-called FANG technology stocks such as Facebook Inc and Netflix Inc – posted earnings of 301, 9% and 201.9%. respectively, making them the second and third most effective funds for the year to 9 December.
Among actively leveraged funds that do not use leverage, the ARK Innovation ETF posted the best overall return with a growth of 143.8%, followed by an increase of 141.4% in the American transformation and innovation fund Beacon ARK and 139.7% in Morgan Stanley Institutional. Discovery Foundation.
According to Morningstar, almost all of the top 10 funds in the U.S. have concentrated portfolios that hold less than 50 stocks and in some cases have more than 10% of their assets in shares of one company.
These high stakes helped pay off during a broad market rally that pushed several asset classes to historic highs and led the S&P 500 to more than 65% growth after a low it reached in mid-March when much of the U.S. economy stalled to prevent coronavirus spread. .
“If fund management bets big bets on multiple growth names, they’ll fall into home runs, but they can also strike out,” said Todd Rosenblatt, head of the ETF and mutual fund research fund CFRA.
At the same time, the worst performers were funds that made a long bet on oil and gas stocks, which this year fell due to a collapse in demand, which for the first time in history in April briefly turned futures on oil negative.
The ETF Direxion Daily S&P Oil & Gas E&P 2X fell 97.3% year-on-year, followed by the ETF Direxion Daily Junior Gold Miners Bear 2X, which fell 95.5% year-on-year.
Among the actively managed equity funds, the Highland Small Cap Equity equity fund showed the worst return for the year with a decline of 51.1%.
Meanwhile, the American Funds Strategic Bond became the most effective fund of intermediate major bonds with an increase of 17.7%. According to Morningstar, the fund has about 43% of its portfolio in the Treasury, which is twice the weight of its benchmark index. Its results are about 18 percentage points ahead of the worst year in this category, Putnam Mortgage Securities A, which has about half of its portfolio of cash and less than 1% of treasury assets.
Report by David Randall; Edited by Megan Davis and Andrea Richie.
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