Latin America offered investors one of the few lifelines in 2022 as global equity markets tumbled, with the region generating a cumulative US dollar return of 5.07%.
Latin America benefited from higher commodity prices in 2022 as well as attractive interest rates.
At the same time, hawkish monetary policy in Brazil also supported the currency, which has remained stable against the surging US dollar.
Latin America, which was one of the worst performing sectors in 2021 (-16.2%), ranked first in 2022.
Latin America was dragged down by the Brazilian bourse in 2021 due to a combination of sluggish economic growth and rising interest rates.
The other bright spot in 2022 was natural resources, which generated a 2.50% return for the year, according to FE fundinfo.
The sector includes funds investing in metals and mining, water, timber and so on.
The commodities sector also benefited from record high inflation, which led to high prices, although the sector still posted a return of -10.81% for the year.
Overall, emerging markets fared better than developed markets. Funds that invest in individual countries in Asia Pacific were also one of the best performers this year, according to FE fundinfo.
But not all countries in that category performed well. While the JP Morgan Thailand fund posted a positive return of 6.55% and the Eastspring Investments Indonesia Equity fund generated a 1.56% return in 2022, funds that invest in Vietnam and the Philippines posted returns ranging from -13.80% to -45.71%.
India was another emerging market that has performed better than the global average.
Thanks to resilient domestic flows, the NSE Nifty 50 Index was up 7% this year.
Top 5 performing equity sectors in 2022
|Other Asia Pacific Single Country||-11.58%|
As the market became increasingly concerned about rising interest rates, sustained inflation and slowing economic growth, growth sectors and tech names were hit particularly hard in 2022.
Funds within the technology, media, and telecommunications sector bled the most in 2022, down nearly 35%, while the tech-heavy Nasdaq index recorded a loss of 33.1% last year.
Reversing a stellar year in 2021, Taiwan was the second worst performing market in 2022 having been the best performer a year ago.
Taiwan Semiconductor Manufacturing, which played a key role in propping up the Taiwanese market in 2021, was down 42% in 2022 as investors worried about falling demand for advanced chips and the impact of a potential recession on the industry.
Stocks listed in Taiwan posted a return of -31.82% in 2022, compared with 30% a year ago.
With fears of a looming recession, cyclical sectors such as consumer goods and services were also down by over 30% in 2022.
The other worst performing sectors included Europe small or mid cap (-27.96%) and Korea (-30.15%).
Meanwhile, Hong Kong was ranked seventh with a cumulative return of -14.17%, while Greater China was the seventh worst performing sector with a cumulative return of -24.54%.
Bottom 5 performing equity sectors in 2022
|Consumer Goods & Services||-30.20|
|Europe Small/Mid Cap||-27.96|
See the best and worst performing equity sectors for 2021 here.