The best and worst-performing exchange-traded funds in 2024

It has been a strong year for investors. Global equity markets, as measured by the MSCI World index, are up 22% (all data to 12 December), while the US market has nearly delivered 30% returns. Even UK shares have risen a respectable 10%.

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Meanwhile, inflation has dropped to around 2% and interest rates have begun to fall. Outside the developed world, India and China are up nearly 20%. Bonds are generally flat, however.

Anyone investing in a broad equity market exchange-traded fund (ETF) has done well, but some more specialist ETFs have done even better.

There have also been some big losers this year investing in themes that have not worked out. Here, we take a look at the best and worst ETFs of 2024.

The top performers

Not for the first year, technology and cryptocurrency-related ETFs delivered the strongest returns.

In first place was WisdomTree Blockchain Ucits ETF, returning 69% in the year to 12 December. Just behind was Grayscale Future of Finance ETF.

Both ETFs invest in companies involved in blockchain, which is the technology that underpins cryptocurrency. They are not allowed to hold cryptocurrencies directly, but are seen as a proxy for the sector that investors can add to their investment accounts. Bitcoin has risen 130% in value this year, to more than $100,000 (£80,000) per coin.

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Both ETFs have large positions in Coinbase, Robinhood and Block. The WisdomTree ETF also owns Microstrategy, which itself invests in Bitcoin.

The other eight ETFs on the list invest in technology shares. They range from a broad tech allocation, such as iShares S&P 500 Information Technology Sector UCITS ETF, Xtrackers MSCI World Com Services ETF and Xtrackers MSCI USA Information Technology UCITS ETF, to a more specific part of the tech space, such as internet shares (First Trust Dow Jones Internet UCITS ETF), communication services (SSGA SPDR MSCI World Communication Services UCITS ETF) and cloud computing (First Trust Cloud Computing UCITS ETF).

The best-performing ETF was First Trust Cloud Computing UCITS ETF, rising 45%. Its top positions include relatively unknown cloud service companies such as Arista Networks and Pure Storage. It also owns tech giants like Amazon, Microsoft and Alphabet.

The communication services ETFs are less tech-heavy than the other ETFs, but do include companies that most would classify as tech shares rather than communications companies, including Netflix, Alphabet and Meta Platforms.

Sector-specific ETFs are generally very concentrated with top shares accounting for more than 15% of portfolios. This means periods of big gains can be followed by large drops.

Source: FE FundInfo, total return 1 January 2024 to 12 December 2024. Past performance is not a guide to future performance.

The bottom performers

Latin American equities and renewable energy shares were the worst places to be invested this year.

Invesco Solar Energy UCITS ETF, Invesco Global Clean Energy UCITS ETF, iShares Global Clean Energy UCITS ETF, and WisdomTree Renewable Energy UCITS ETF all suffered as demand for clean energy shares dropped.

This was linked to Donald Trump’s election and the likely withdrawal of government support for the sector, but also doubts about the future of renewable energy investment under higher interest rates and lower oil prices. There have also been operational problems at key renewable energy stocks, such as Vestas Wind Systems.

Meanwhile, the other big losing theme was Latin American equities, and particularly Brazilian shares.

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The FTSE Latin America index, in sterling, is down just over 20% this year. The Brazilian market, which is the largest part of the index, has fallen more than 25% in sterling terms.

The fall was exacerbated by the drop in the value of the Brazilian real, which has fallen around 20% this year relative to sterling.

Latin American equities are dominated by mining and oil shares, as well as banks. This makes the market very volatile as the health of the domestic and global economy has a large impact on share prices.

Source: FE FundInfo, total return 1 January 2024 to 12 December 2024. Past performance is not a guide to future performance.