In this piece, we will take a look at the 15 worst performing mutual funds in 2023. If you want to skip our introduction to the economy and mutual funds, then take a look at 5 Worst Performing Mutual Funds in 2023.
With the final quarter of 2023 upon us, the second half of the year is shaping up to be quite different from what we saw in the first half. The year kicked off with worries that the U.S. economy would slide into a recession as multiple and consecutive interest rate hikes by the Federal Reserve were simply too much for businesses and consumers to bear. As investors and analysts poured over economic data to see what lay ahead, a mini crisis in the banking industry shook confidence overall as some feared that the worst effects of the Fed’s interest rate hikes – namely bank failures – were starting to materialize.
However, bank failures remained limited to the regional banking sector, and soon, economic growth data showed that despite multi decade high interest rate levels, the economy was continuing to tick along. At the same time, stock market investors in particular were dealt a nice surprise as the hype surrounding generative artificial intelligence (AI) technologies reached a feverish pitch. This made big technology stocks soar to record highs, and indexes such as the NASDAQ 100 post record gains for the first half even though significant concerns about economic health remained.
The market ended the first half with optimism, but as the third quarter of 2023 ends and the tail end of 2023 is on our doorsteps, the broader mood is much darker than just a couple of months back. A big reason behind this is the belief that the Federal Reserve will continue to keep rates higher than longer, and this has caused stocks to lose and funds to flow inside the U.S. as bond yields soared once again. Interest rates, economic growth, bond yields, and stock market futures are some of the most important indicators of the economy to watch right now, and as October starts, all of these are at crucial levels.
For instance, bond yields have soared once again as 30 year bond yields soar to levels seen in 2007, as the yield stood at 4.869% and crossed its 2010 level of 4.8559%. This selloff in the bond market comes on the heels of the latest JOLTS data for the labor market from the Labor Department, and investors, it seems, are worried that the labor market might not be slowing down sufficiently to prompt the Federal Reserve to cut rates sooner than is expected right now. The scare in the bond market was enough to remove the positive effects on the stock market of the U.S. government being able to avoid a shutdown after last minute legislation by Congress over the weekend.
The complexity of the market has also created rifts among experts about what to expect in the future. For instance, analysts over at Morgan Stanley believe that the best of the stock market is behind us and interest rates will continue to play an outsized role in the market over the coming months. On the flip side, analysts at Bank of America believe that stocks will continue to rise in a high rate environment, with their sentiment bolstered by a ‘purge’ recently that has seen the “weaklings” accounted for as more large cap firms now trade as small cap firms than the vice versa. Goldman Sachs is another optimist among us, as the bank believes that equities are now at low valuations after a poor performance in August and September, and this might smell like an opportunity since earnings estimates continue to rise despite the lackluster share price performance.
While one way to invest in the stock market is to simply buy stocks, another is to buy units or shares of pooled investment vehicles such as mutual funds. American mutual funds are some of the biggest in the world, and funds that invest in stocks naturally typically see their returns mirror those of the broader market. We’ve covered the global and American mutual fund markets in detail as part of our coverage of 20 Best Mutual Funds in 2023, and if you are interested in growth funds and their stock picks, then check out 10 Best Growth Mutual Funds and Their Latest Top Picks.
Today, we’ll switch sides and take a look at the worst performing mutual funds in 2023, with the bottom barrel picks being ProFunds UltraShort NASDAQ-100 Svc (NASDAQ:USPSX), Rydex Inverse NASDAQ-100 2x Strategy C (NASDAQ:RYCDX), and Ultra Short Japan ProFunds Investor Class (NASDAQ:UKPIX).
Photo by Sharon McCutcheon on Unsplash
Our Methodology
To compile our list of the worst performing mutual funds in 2023, we first used Yahoo Finance’s screener to pick out 50 funds with the lowest year to date returns. Then, the top 15 funds with the lowest returns were chosen as the worst performing mutual funds in 2023.
15 Worst Performing Mutual Funds in 2023
15. ClearBridge Sustainability Leaders R (MUTF:CBSLX)
Year to Date Return: 2.57%
ClearBridge Sustainability Leaders R (NASDAQ:CBSLX) is part of the Franklin Templeton Investments fund family and has net assets of $164 million. The fund is rated as three stars by Morningstar Financial, and it was set up in 2015. As the title suggests, the mutual fund invests in companies with high ESG scores, and its benchmark index is the Russell 3000 Index. It is a sizeable fund with more than $2 billion in assets under management, and nearly a third of its investments are in information technology firms. It joins Rydex Inverse NASDAQ-100 2x Strategy C (NASDAQ:RYCDX), ProFunds UltraShort NASDAQ-100 Svc (NASDAQ:USPSX), and Ultra Short Japan ProFunds Investor Class (NASDAQ:UKPIX) in our list of the worst performing mutual funds in 2023.
14. Oaktree Emerging Markets Equity A (NASDAQ:OEQAX)
Year to Date Return: -2.68%
The Oaktree Emerging Markets Equity A (NASDAQ:OEQAX) mutual fund is part of the Oaktree Funds fund family. It is managed by Oaktree Capital Management and is a relatively younger fund since it was set up in 2021. Most of its holdings are concentrated in stocks, and roughly 60% of the portfolio has invested in basic materials, financial services, and consumer cyclical firms.
13. Shelton Sustainable Equity Fund (NASDAQ:NEXIX)
Year to Date Return: -7.86%
Shelton Sustainable Equity Fund (NASDAQ:NEXIX) was set up in 2013 and has $188 million in net assets. It is part of the Shelton Capital Management fund family and is a three star mutual fund. 95% of the portfolio is invested in stocks, and 40% of the stock holdings are in industrial firms – which leaves the fund susceptible to economic downturns.
12. UBS All China Equity Fund (NASDAQ:ACPTX)
Year to Date Return: -10.25%
UBS All China Equity Fund (NASDAQ:ACPTX) is part of the UBS Asset Management fund family. The fund has $1.27 billion in total assets and $3 million in net assets. The mutual fund invests in Chinese equities, and its portfolio consists of a blend of companies that are traded on the Hong Kong exchange, Chinese A shares and B shares, and American Depository Receipts (ADRs).
11. Voya MidCap Opportunities P3 (NASDAQ:VPMOX)
Year to Date Return: -20.22%
Voya MidCap Opportunities P3 (NASDAQ:VPMOX) is part of the Voya fund family and is one of the larger funds on our list in terms of net assets since it has $688 million in net assets. It is also one of the oldest funds since it was set up in 1998. the fund has a forward price to earnings ratio of 29.84, and more than 50% of the portfolio is concentrated across information technology, healthcare, and industrial companies.
10. Green Owl Intrinsic Value (NASDAQ:GOWLX)
Year to Date Return: -20.98%
Green Owl Intrinsic Value (NASDAQ:GOWLX) is part of the Green Owl fund family. It has net assets of $80 million and was set up in 2011. All of the fund’s assets are invested in stocks, with more than half of the portfolio being concentrated in consumer cyclical, financial services, and technology stocks.
9. Voya Global Bond P (NASDAQ:IGBPX)
Year to Date Return: -21.05%
The Voya Global Bond P (NASDAQ:IGBPX) is the first non stock mutual fund on our list. As the title suggests, the fund invests in bonds and it is part of the Voya fund family. The mutual fund has $261 million in net assets, and it invests in bonds issued all over the world. 74% of the portfolio is concentrated in U.S. bonds and the second highest concentration is for Chinese securities.
8. Voya Large-Cap Growth P3 (NASDAQ:VPLCX)
Year to Date Return: -22.86%
The Voya Large-Cap Growth P3 (NASDAQ:VPLCX) is another fund part of the Voya funds family. It is a stock mutual fund, which invests in large cap companies on an aggressive growth track. Dividends are paid semi annually and the fund has a forward price to earnings ratio of 31.50. Its top stock picks are the mega cap giants Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT).
7. ProFunds Banks UltraSector Fund (NASDAQ:BKPSX)
Year to Date Return: -23.59%
The ProFunds Banks UltraSector Fund (NASDAQ:BKPSX) is part of the ProFunds fund family. The fund was set up in 2001, and it has $6.8 million in net assets. It targets bank stocks that are part of the S&P Total Market Index, has invested in 89 companies, and has a price to earnings ratio of 7.04.
6. John Hancock Regional Bank Fd Cl C (NASDAQ:FRBCX)
Year to Date Return: -24.09%
The John Hancock Regional Bank Fd Cl C (NASDAQ:FRBCX) mutual fund invests 80% of its portfolio in regional bank stocks. It has $784 million in net assets, and the fund was set up in 1992, making it one of the oldest on our list. The fund’s top three investments are in M&T Bank Corporation (NYSE:MTB), Regions Financial Corporation (NYSE:RF), and Huntington Bancshares Incorporated (NASDAQ:HBAN).
ProFunds UltraShort NASDAQ-100 Svc (NASDAQ:USPSX), John Hancock Regional Bank Fd Cl C (NASDAQ:FRBCX), Rydex Inverse NASDAQ-100 2x Strategy C (NASDAQ:RYCDX), and Ultra Short Japan ProFunds Investor Class (NASDAQ:UKPIX) are some of the worst performing mutual funds in 2023.
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Disclosure: None. 15 Worst Performing Mutual Funds in 2023 is originally published on Insider Monkey.