4 Billion-Dollar ETF Busts from 2024

A quartet of very different exchange-traded funds ironically have the same New Years’ resolution this year: make investors forget about 2024.

With poorly performing ETFs, investors can sometimes get what the psychology crowd calls “the recency effect.” It’s a cognitive bias that causes people to better remember information they took in most recently. Or as some market commentators like to say: Investors want what they wish they owned last year. In the ETF business, there’s a long history of dollars chasing past performance. 

That bias works the same way in reverse, meaning investors generally head for the hills when they come across funds with a questionable track record. But poor performance is not necessarily an indication of what’s to come. Sometimes it is best to look at the losers’ list for new ideas, rather than what’s been working. 

Billion-Dollar Buyers’ Club?

There’s a foursome of intriguing ETFs that still have at least $1 billion in assets (excluding leveraged and inverse funds) despite taking a good ol’ faceplant in 2024. While SPY and QQQ were getting all the love, these funds were the financial equivalent of flushing money down the drain. 

That being said, there are still reasons to give them a look, and arguments to be made that they could mount a comeback. Their remaining asset bases certainly imply they are not shutting down anytime soon. Here’s a list of four ETFs that could have room for improved performance in 2025:

• ARK Genomic Revolution Multi-Sector ETF (ARKG). Biotech is a hit-or-miss proposition, so that makes any calendar year a potential success. Plus, some investors might find it hard to count out Cathie Wood’s ARK Invest, even after this fund dropped 28% in 2024.
• iShares S&P Latin America 40 Index Fund ETF (ILF). This one took a decline of 23% last year. However, if political reform continues to impact the rest of that region the way it has Argentina, it could storm back. That market was up 140% in 2024.
• iShares S&P 500 Global Clean Energy Index Fund ETF (ICLN). This fund was down 26% last year, but solar and other forms of alternative power tend to go in and out of favor with investors. The good news is 60% of this ETF is allocated to non-US stocks, so it’s geographically diversified, and the portfolio sells for only 14 times its trailing 12-month earnings.
• Sprott Uranium Miners ETF (URNM). While this ETF has 40 holdings, the top 10 make up more than 75% of assets. That means it won’t take a lot to bounce back from its 14% nose dive last year.

Au Contraire! Sometimes as investors, there are added benefits attached to being the buyer of investments that others are selling. (I seem to recall Warren Buffett doing a fairly good job of that.) Advisors would be wise to start searching for comeback stories. A market climate like this one is poised to anoint quite a few dark horses before 2025 is finished. You never know, investors might look back a year from now and gladly suffer from amnesia.