Was North American exposure worthwhile in 2020?

If you kept your index-tracking North American equities fund and didn’t panic sell, you likely will have seen a decent return for 2020, according to data.

According to FE Analytics, within the Australian Core Strategies universe, the North American equities sector had an average return of 1.8%.

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The small 17 fund sector was mostly comprised of exchange traded funds (ETFs) that tracked the major US indices, such as the NASDAQ 100 and S&P 500.

Performance of the NASDAQ 100 and S&P over the 12 months to 30 November 2020

The BetaShares NASDAQ 100 ETF returned 34.4%, followed by the Geared US Equity Currency Hedged ETF (15.7%), TBH US Micro Cap (10.65%), Vanguard US Total Market Shares Index (9.33%) and State Street Global Advisors (SSgA) SPDR S&P 500 ETF Trust (8.64%).

Betashares’ NASDAQ fund tracked the top 100 of the index and its top holdings included Apple, Microsoft, Amazon, Tesla and Facebook.

One of the criticisms of US-based index investing was its dependence on the major technology stocks, particularly the FAANG stocks, as well as Tesla with the fear those stocks were becoming overvalued.

The Geared US Equity Currency Hedged fund was “internally geared”, which meant it combined funds received from investors with borrowed funds and invested the proceeds in a diversified portfolio of the top 500 US shares.

Its top holdings included Apple, Microsoft, Amazon, Alphabet and Facebook, which was the same for the Vanguard and SSgA funds.

Dragging down the sector performance was the BetaShares US Equities Strong Bear ETF Currency Hedged which lost 46.99%, but gained 134.97% in the month up to 23 March, 2020.

The ETFS S&P 500 High Yield Low Volatility ETF (-17.95%), BetaShares’ S&P 500 Yield Maximiser (-6.54) and FTSE Rafi U.S.1000 (-3.09%) also detracted from the sector performance.

However, the ETFS and Betashares yield funds were focused on income and delivered yield returns of 6.23% and 6.9% respectively, over the 12 months to 30 September, 2020.

Best-performing North American funds over the 12 months to 30 November 2020