What Are the Best ETFs to Watch in 2022?

Roberto Rivero

Exchange-Traded Funds (ETFs) make investing in funds much more accessible to retail investors and, consequently, have grown enormously in popularity over the last decade.

This increase in popularity has led to thousands of new ETFs springing up in recent years – meaning that, with so much choice – it can be difficult for investors to find the best ETFs. Much like stocks, there is an ETF out there to fit every type of investment strategy and, in this article, we have compiled a list of some of the best ETFs to watch in 2022!

What Is an ETF?

ETFs are a type of fund which are traded throughout the trading day on stock exchanges, just like the shares of a company. This characteristic of being traded on stock exchanges makes ETFs low-cost to trade, liquid and accessible to retail investors, who, these days, simply require an internet connection to begin investing in the best ETFs.

ETFs use investor money to purchase a basket of securities which are usually picked in order to replicate an underlying asset, index, sector or economy. Therefore, ETFs provide instant diversification across a number of assets with a single investment.

Unlike buying and holding shares in a company, there are ongoing management costs involved in holding an ETF, which are charged annually. These are typically expressed as a percentage of the total value of your investment and can vary depending on the type of ETF in which you are thinking of investing in.

It is important to make sure you factor these costs in – together with brokers’ commissions - when you are choosing an ETF to invest in, as high costs can begin to eat into any potential gains.

Remember that when looking for the best ETFs, as with any investment, it is important for you to do your own research and to only make investments which conform to your personal strategy and investing goals.

The Best ETFs to Watch in 2022

Whilst many stock index ETFs thrived in 2021, so far in 2022 they have floundered.

For example, the Vanguard S&P 500 ETF (VOO.US), which tracks the S&P 500 stock index, gained more than 27% in 2021. However, as of the 29 June 2022, this particular fund has fallen 20% year to date (YTD).

The resultant low prices of such index ETFs will no doubt be appealing to longer-term investors who have faith in the resilience of the stock market. However, for those seeking returns this year, what are the best ETFs to watch in 2022?

In the following sections, we will take a look at the following ETFs to watch in 2022:

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SPDR S&P Oil & Gas Exploration & Production ETF (XOP.US)

Ongoing Charge Distribution Yield 1-Year Performance 3-Year Performance 5-Year Performance
0.35% 1.59% 76.26% 17.09% 5.10%

Source: State Street Global Advisors – Data as of 31 May 2022

As its name implies, this ETF tracks the performance of an index composed of global companies which are engaged in the exploration and production of both oil and gas.

A major theme so far in 2022 has been rising energy prices. As well as contributing to growing global inflation, it has also led to record profits for many companies which operate in these sectors, as oil and gas supply continues to fall short of demand.

Whilst oil and gas prices remain high, we can expect companies such as the ones included in this ETF to perform well and, for this reason, the SPDR S&P Oil & Gas Exploration & Production ETF makes its way onto our list of the best ETFs to watch in 2022.

Depicted: Admirals MetaTrader 5 - SPDR S&P Oil & Gas Exploration & Production ETF Daily Chart. Date Range: 2 February 2021 - 30 June 2022. Date Captured: 30 June 2022. Past performance is not a reliable indicator of future results.

However, if considering investing in this oil and gas ETF, it is important to weigh the potential risks. Whilst oil and gas demand continues to outweigh supply, we can expect prices to remain high. Nevertheless, the price of oil particularly has come under pressure in recent sessions.

This has largely been a reaction to the Federal Reserve’s decision to hike interest rates, which has sparked fears of an impending economic downturn. If such a downturn materialises, it could be bad news for oil prices.

Furthermore, higher interest rates have strengthened the US dollar and, as both oil and gas are priced in US dollars, this has made these commodities even more expensive for foreign purchasers. All things being equal, this could have a negative impact on oil and gas demand in the near future.

iShares Gold Trust ETF (IAU.US)

Ongoing Charge 1-Year Performance 3-Year Performance 5-Year Performance
0.25% - 3.47% 12.10% 7.48%

Source: iShares – Data as of 31 May 2022.

Whereas oil and gas may be best avoided during a downturn, safe-haven asset gold has historically done well during times of economic turbulence.

The ‘Great Recession’ is a good example of this. In the wake of the financial crisis, stock markets struggled to recover from the initial crash. Meanwhile, spot gold went on a rally which saw it gain more than 162% in less than three years.

Whereas many gold ETFs operate by tracking indices composed of companies engaged in the exploration and production of gold, the iShares Gold Trust ETF actually invests in physical gold on behalf of its shareholders. Therefore, buying shares in this ETF provides investors with direct and cost-effective exposure to gold, meaning that this could be one of the best ETFs to watch in the event of an economic downturn.

Depicted: Admirals MetaTrader 5 - iShares Gold Trust ETF Daily Chart. Date Range: 29 January 2021 - 30 June 2022. Date Captured: 30 June 2022. Past performance is not a reliable indicator of future results.

Utilities Select Sector SPDR Fund ETF (XLU.US)

Ongoing Charge Distribution Yield 1-Year Performance 3-Year Performance 5-Year Performance
0.10% 2.93% 17.57% 11.94% 10.18%

Source: State Street Global Advisors – Data as of 31 May 2022

During times of economic uncertainty such as we find ourselves now, investors are usually drawn towards companies which operate in defensive industries or, in other words, companies which can continue to generate reliable income regardless of the overall health of the economy.

The utility industry is a good example of a defensive industry. Regardless of what is happening in the wider economy, people will generally continue to consume water and electricity and to pay their bills, even if they have to make concessions in other areas of their life in order to do so.

The Utilities Select Sector SPDR Fund ETF tracks the performance of an index which is composed of companies that operate in the utilities sector. Thanks to the generally reliable income generated by these companies, like our previous choice, this could prove to be one of the best ETFs to watch during a market downturn.

Depicted: Admirals MetaTrader 5 - Utilities Select Sector SPDR Fund ETF Daily Chart. Date Range: 29 January 2021 - 30 June 2022. Date Captured: 30 June 2022. Past performance is not a reliable indicator of future results.

How to Invest in ETFs with Admirals

If you are looking for somewhere to invest in the best ETFs, look no further than an Invest.MT5 account from Admirals! 

An Invest.MT5 account allows you to invest in over 300 ETFs and more than 2,500 stocks! In order to start investing in ETFs today, follow these steps:

  1. Open an Invest.MT5 account and log in to the Dashboard
  2. Next to your Invest.MT5 account details, click ‘Invest’ in order to open the WebTrader
  3. Scroll to the bottom of the Market Watch window on the left of the screen, search for the ETF you want to buy and add it to the Market Watch
  4. Once added, click and drag the ETF symbol onto the chart to open its price chart
  5. Right-click on the chart, select ‘Trading’ and then ‘New Order’ to bring up an order screen. Here, you can select the number of shares you want to buy or sell and send your order to the market!
Depicted: Admirals WebTrader - XOP.US Daily Chart - New Order. Date Range: 25 October 2021 - 30 June 2022. Date Captured: 30 June 2022. Past performance is not a reliable indicator of future results.

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