In 2022, US stock market had its worst year in a long time. SPY, an ETF which tracks the S&P 500 (the 500 largest public companies in the US), finished the year -18.1%. SPY, which was launched in 1993 and is the largest ETF in the US (as measured by Assets Under Management), had not had a year like that since 2008, when it had a -36.9% return.
From 2009 to 2021 the market went on a run that rewarded long term investors, finishing 12 of 13 years in positive territory. And the only year with a negative return, 2018, was very mild, with the index returning -4.4%. A side note: in addition to being the largest ETF in the US, SPY is also the oldest (it was launched 30 years ago this week).
But how did the rest of the world do in 2022? What types of returns did other stock indexes have last year? We can find out by reviewing the returns of a variety of iShares ETFs that track stock indexes around the world. These types of ETFs give investors in the United States the ability to invest in the stock markets of other countries without having to deal with all the headaches of setting up and maintaining a brokerage account in other countries.
So if you had pulled out your money from the S&P 500 at the beginning of 2022 and invested in a foreign stock index how would you have done? In almost all cases, you would have done better than if you had kept your in SPY. Here are the numbers:
Which index did worse than SPY in 2022? That would be EPOL, which tracks Polish stocks. It finished the year -24.6%.
What indexes had similar returns to SPY in 2022? Three indexes that had similar returns to SPY were EWJ (which tracks Japanese stocks), EPHE (which tracks Filipino stocks) and EWC (which tracks Canadian stocks). EWJ returned -17.7%, EPHE returned -15.8%, and EWC returned -12.9%.
What indexes did better than SPY in 2022? Four indexes that had better returns were INDA (India), EZA (South Africa), EWU (United Kingdom) and EWW (Mexico). INDA returned -8.9%, EZA returned -5.1%, EWU returned -4.3%, and EWW returned 1.2%.
What indexes did much better than SPY in 2022? Three indexes that not only did better than SPY but beat it by a very wide margin were EWZ (Brazil), ECH (Chile) and TUR (Turkey). EWZ returned 12.3%, ECH returned 25.1% and TUR returned 105.8%.
For retail traders looking to beat the S&P in the short term, almost every foreign stock index would have given a better return than the SPY. However, for investors who hold stocks for the longer term, SPY is still without comparison. Looking at returns for the past 10 years (from 2013 to 2022), none of these indexes would have come close to generating the returns that SPY did. Here are the total returns for the last 10 years:
- SPY 219.9% return
- INDA (India) 78.9%
- EWJ (Japan) 71.9%
- EWC (Canada) 48.3%
- EWU (United Kingdom) 34.6%
- EZA (South Africa) 2.9%
- EWW (Mexico) -4.6%
- EPHE (Philippines) -12.2%
So what are the main takeaways? For active traders who felt that US stocks were due for a correction, 2022 a lot of opportunities abroad. For long term investors the story was different. The US stock market stood alone as the best place to park your money for the last 10 years. But who knows what the future holds?