Volatility returned with a vengeance in late 2018. In our 2017 reflection post, we talked about 2017 being one of the least volatile on record, with 86% of ETFs & LICs in Australia recording postive performance. A sharp selloff in early 2018 and a more savage selloff in late 2018 saw that number reverse, with only 33% of ETF and LICs reporting positive performance (including dividends). Where 50% of funds reported double digit growth in 2017, just 4% recorded this sort of growth in 2018. Investors who came out of 2018 with their capital preserved did well and investors who managed some growth did exceptional.

Below we have listed the performance of all of the ETFs and LICs that we follow at ETF Watch. Only funds which were available on 1 January 2017 have been included, which means the 36 ETFs and LICs launched in the last 12 months are not included below.

The leaderboard includes a mixed bag of niche and thematic funds, as some sub-sectors managed to return positive performance. At the top of the leaderboard is ETFS Physical Palladium (ETPMPD), a tiny fund investing in the reasonably unknown commodity that is commonly used in automotive engines, this is follwed by small LIC NGE Capital Limited (NGE), thanks to their successful bet on vacuum retailer Godfreys early in 2018. Funds with US dollar focus performed well as the Australian dollar fell by over 10% against the US doillar over the course of the year. This saw leveraged US dollar play Betashares Strong US Dollar Fund (YANK), and unleveraged options USD and ZUSD provide double digit returns. The strong dollar also helped MFF Capital and their overweight position to US stocks. Despite the technology selloff in late 2018, the strong performance of tech stocks in the first half of the year saw TECH, HACK and NDQ all perform well.

The rear of the pack was filled with a number of underperforming LICs, leveraged ETFs & currency hedged ETFs, who did not benefit from the tailwinds of the falling Australian dollar.



* Income yield has been calculated based on income divided by closing price on 31 December 2018. Total performance has been calculated by simply adding the performance and the yield (ignoring the timing of dividend payments). Whilst the franked component of income payments has been calculated, the income payment has not been grossed up by the franking credits. All performance is based on closing share prices rather than underlying Net Tangible Assets. As usual, past performance should not be used as an indication of possible future returns, and we recommend this data not be used to support investment decisions.