New data reveals the five most popular exchange-traded funds so far in 2022.
Interestingly, the data suggests investors have been eager to gain exposure to a wide range of sectors this year. Let’s take a closer look.
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What is an ETF?
An exchange-traded fund (ETF) is an investment product that can track a share index, such as the FTSE 100. Other ETFs may track the price of a particular sector or another type of asset.
ETFs can be bought and sold on a stock exchange, and they are popular among passive investors. That’s because they’re often considered an easy and cheap way to gain exposure to a large number of shares.
What ETFs have investors been buying recently?
According to Hargreaves Lansdown, these are the most popular ETFs among investors in 2022 (so far).
- Vanguard Funds S&P 500 UCITS ETF
- iShares Core FTSE 100 ETF
- iShares Physical Gold ETC
- Invesco Markets Bloomberg Commodity ETF
- iShares Global Clean Energy ETF
As shown by the above list, investors have clearly been eager to gain exposure to a wide range of sectors this year. This may not be surprising given the global economy has been unpredictable in 2022, to say the least.
Let’s take a closer look at each of the ETFs listed above.
1. Vanguard Funds S&P 500 UCITS ETF
A popular ETF to invest in during 2022 is the Vanguard S&P 500 UCITS ETF. As its name suggests, the ETF tracks the price of the S&P 500 index.
The S&P 500 consists of the biggest companies listed in the United States, and its constituents include big tech giants, Amazon, Alphabet, Meta and Microsoft to name a few. Given its extensive membership list, the S&P 500 is widely considered to give the best indicator of the performance of the US stock market as a whole.
Since its creation back in 1957, the index has delivered impressive average returns of 10.5%, through to 2021. The past few years have been a standout period for the index. In 2019, the S&P 500 delivered a return of 31.49%. In 2020 it rose 18.4% while last year, the S&P 500 finished the year 26.89% higher.
2. iShares Core FTSE 100 ETF
Another popular ETF with investors this year is the iShares Core FTSE 100 ETF, which tracks the performance of the UK’s largest share index. So far this year, the FTSE 100 has risen just over 1%.
According to Emma Wall, Hargreaves Lansdown’s head of investment analysis, investors putting their faith in the FTSE 100 gain exposure to a number of sectors, thanks to its ‘hefty weighing’ towards energy, materials and industrials.
Wall highlights that many of these sectors have performed strongly in 2022 due to “rising metals, oil and gas prices”.
3. iShares Physical Gold ETC
The iShares Physical Gold ETC has been popular with investors this year. It’s an exchange-traded commodity and it works in much the same way as an ETF. The main difference is that it tracks the price of a single commodity: gold.
So far in 2022, the precious metal has seen its value soar by more than 10%. Last month, the gold price was even higher than it is today, though commodities, including gold, have since fallen a tad.
That said, a 10% rise is nothing to be sniffed at, and it compares very well against the major share indexes in 2022. For example, the FTSE 100 has risen a misery 1% so far this year. Traditionally, the gold price rises during times of economic uncertainty, so investors recently piling in to buy gold are perhaps anticipating further economic woes.
4. Invesco Markets Bloomberg Commodity ETF
The Invesco Markets Bloomberg Commodity ETF provides broad exposure to the Bloomberg index. This index comprises 24 commodities across energy, grains, metals, soft commodities and livestock.
As a result, it’s fair to say the ETF gives investors exposure to a wide range of industries. According to Emma Wall, it’s “not surprising” that the Bloomberg Commodity ETF has been popular this year. That’s because the ongoing war in Ukraine has sent the price of a number of commodities soaring, including wheat, aluminium, copper, oil and gas.
5. iShares Global Clean Energy ETF
The iShares Global Clean Energy ETF has also been a favourite among investors this year. The ETF tracks the performance of the S&P Global Clean Energy Index and is a textbook example of investing in renewable energy sources.
Given the soaring cost of fossil fuels in recent weeks, it’s perhaps not surprising that investors are now looking towards investing in more ethical sectors.
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How can you invest in an ETF?
Regardless of the sector, if you want to invest in an ETF you can do so via a share dealing account. If you can, choose an account with low fees to minimise costs.
If you’re new to investing, also take a look at The Motley Fool’s investing basics guide to help you start on the right path.
