In this article, we will take a detailed look at 8 Worst Performing Mutual Funds in 2024.
Mutual funds with exposure to large and mid-cap US companies were big winners in 2024 as the overall US equity market remained bullish for the second year in a row. As the artificial intelligence boom drove markets higher, some mutual funds outperformed the overall market, and the S&P 500 gained 24%.
Large-cap growth funds were up by almost 30% for the year. That was the highest gain of all the main fund categories. Small-cap growth funds were up by an average of 14.7%, as mid-cap growth funds surged 16%.
According to LSEG, the average U.S. stock fund increased 17.4% overall in 2024, including a 1.2% gain in the fourth quarter. Even though the 2024 performance didn’t quite match the previous year’s 21% gain, stock funds have now experienced impressive growth for two consecutive years. The main drivers of the gains were the U.S. economy’s recovery and investors’ expectation that the Federal Reserve would cut rates.
READ ALSO: 10 Best Get Rich Quick Stocks To Invest In and 10 Worst Performing Altcoins in 2025.
The explosion of artificial intelligence and the technologies supporting its adoption and growth also had a hand in driving stocks, thus helping to improve the performance of funds that finished at the top. Increased holdings from the “Magnificent Seven” technology stocks, such as Nvidia and Meta Platforms, allowed U.S. large-cap growth funds to maintain their dominance in the mutual fund market.
“It’s hard to outperform large-cap when you’re in small-cap and you don’t have the Mag Seven,” says Brian Smoluch, a longtime co-manager of the small-cap growth fund.
On average, foreign stock funds were unable to keep up with their U.S. counterparts. The fourth quarter’s 7.3% thrashing held back the category’s 4.8% gain. On the other hand, bond funds saw a modest increase for the year. Investment-grade debt funds recovered from a nearly 3% drop in the fourth quarter to end the year up 1.8%.
Investors remain bullish on mutual funds focused on bonds and U.S. stock funds. According to estimates, investors pumped a net $177.2 billion into U.S.-stock mutual funds and exchange-traded funds (ETFs) in 2024. Only $11.6 billion was allocated to international stock funds.
Although the frenetic buying that occurred earlier in the year subsided as the year came to a close, bond funds fared better in the flows than stock funds. According to ICI estimates, investors poured a net $488.6 billion into bond funds for the entire year 2024 in anticipation of the Fed’s rate-cutting actions, which started in September. However, the buying slowed, and estimates indicate that December ended as a comparatively weak month for flow data.
A close up of an investor’s hand holding a financial portfolio of mutual funds.
Our Methodology
To compile our list of 8 worst performing mutual funds in 2024, we first used Yahoo Finance’s screener to pick out 50 funds with the lowest year-to-date returns. Then, the top 8 funds with the lowest returns were chosen as the worst-performing mutual funds in 2024. Finally, we ranked the funds based on their 2024 returns.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Worst Performing Mutual Funds in 2024
8. William Blair Small-Mid Cap Growth R6 (WSMRX)
Mutual Fund’s 2024 Return: 2.17%
William Blair Small-Mid Cap Growth R6 (WSMRX) is a mutual fund that invests primarily in stocks of small and medium-sized companies. It also targets a diversified investment portfolio as one way to spread the risk. Consequently, it invests in common stocks and other equity investments, including securities convertible into common stocks.
While focusing on small and mid-cap US companies poised to exhibit quality growth characteristics, the fund seeks long-term capital appreciation. Some of the fund’s biggest holdings include Dyntrance Ordinary shares, Stride Inc. and The Carlyle Group. While the fund was up by about 2.17% in 2024, it underperformed the broader US equity market, that was up by about 24%.
7. Fidelity Select Transportation (FSRFX)
Mutual Fund’s 2024 Return: 1.8%
Fidelity Select Transportation (FSRFX) is a US-listed mutual fund that invests 80% of its assets in companies that offer transportation services. It also invests in companies that design, manufacture, distribute and sell transportation equipment. While the fund focuses on domestic companies, it invests in foreign insurers as part of its diversification strategy.
The fund specializes in fundamental analysis when looking for investment opportunities in the transportation sector. The strategy entails focusing on the company’s financial conditions, industry position, and overall market condition. The fund is non-diversified as it focuses purely on transportation companies. Even though the mutual fund was up by 1.8% in 2024, it underperformed the broader stock market as the S&P 500 ended the year up 24%
6. Voya Global Bond I (IGBIX)
Mutual Fund’s 2024 Return: -0.71%
Voya Global Bond I (IGBIX) is a mutual fund for diversifying an investment portfolio into the bond market. The fund invests at least 80% of its total assets in bonds issuers in different countries. Its primary investments are in investment-grade securities, such as government and corporate bonds. Typically, the fund’s dollar-weighted average portfolio duration falls within the range of two to nine years.
While the fund has significant exposure to European Union bonds, it also holds bonds in the US and China, gaining exposure to some of the biggest economies in the world. The mutual fund was under pressure in 2024 as it returned -0.71%, which is an underperformance considering it was up by 6.83% in 2023.
5. Fidelity Select Health Care Svcs Port (FSHCX)
Mutual Fund’s 2024 Return: -13.24%
Fidelity Select Health Care Svcs Port (FSHCX) is a mutual fund that invests at least 80% of its assets in companies exposed to managing hospitals, nursing homes, and health maintenance organizations. It stands out as a mutual fund for investors looking to profit from increased spending on healthcare across the US. The fund provides diversified exposure to a range of companies.
Some of the fund’s most significant holdings are UnitedHealth Group, The Cigna Group, and McKesson Corp CVS Health Group. Nevertheless, it was one of the worst-performing mutual funds in 2024, as it went down by about 13.24%, having gained 1.51% in 2023. The mutual fund boasts a 6.15% five-year return with a 0.680% expense ratio.
4. T. Rowe Price Latin America I (RLAIX)
Mutual Fund’s 2024 Return: -22.72%
T. Rowe Price Latin America I (RLAIX) is a mutual fund that pursues long-term capital growth by investing in equity markets. It primarily focuses on stocks of companies listed in Latin America. Consequently, it invests 80% of its assets in Latin American companies. It also seeks to spread its risk by investing in equities in at least four countries.
The fund boasts a significant holding in the financial services sector led by investments in Itau Unibanco Holding SA Participating Preferred and Nu Holdings Ltd Ordinary Shares Class A. It also invests in Basic materials companies with significant exposure in the energy and healthcare sectors. The fund was under immense pressure in 2024, going down by about 22.72%, giving back a substantial chunk of the gains after returning 35.13% in 2023. The fund comes with a 1.08% expense ratio.
3. Rydex Inverse NASDAQ-100 2x Strategy C (RYCDX)
Mutual Fund’s 2024 Return: -34.69%
Rydex Inverse NASDAQ-100 2x Strategy C (RYCDX) is a mutual fund for investors looking to profit from short sales in the equity markets. The fund engages in short sales of securities included in the Nasdaq 100 underlying index. Consequently, the fund tends to generate returns whenever the Nasdaq 100 is under immense pressure.
The fund has emerged as one of the worst-performing mutual funds over the past two years. That’s because the overall tech industry has been in an uptrend amid the artificial intelligence boom. With the Nasdaq 100 rallying to record highs, Rydex Inverse NASDAQ-100 has generated negative returns. The fund has generated negative returns over the past two years. It was down by 63.79% in 2023 and returned -34.69% in 2024 as the Nasdaq 100 gained 24.09%.
2. Ultra Short Japan ProFunds Investor Class (UKPIX)
Mutual Fund’s 2024 Return: -34.79%
Ultra Short Japan ProFunds Investor Class (UKPIX) is a mutual fund for gaining exposure into the Japanese equity markets. Unlike other mutual funds, the fund seeks daily investment returns before fees that are -2X the return of the Nikkei 225 Stock Average. The prices of the 225 TSE First Section stocks chosen to reflect a wide range of Japanese industries and the general performance of the Japanese equity market are used to calculate the Index.
Given that the fund tries to generate -2X returns of the Nikkei 225 stock index, it tends to underperform whenever the overall market is bullish and Nikkei is edging higher. That has been the case over the past two years as Japan’s equity market has been bullish. Ultra Short Japan ProFunds Investor Class was down by 43.26% in 2023 and lost 34.79% in 2024 as the overall equity market remains bullish.
1. ProFunds UltraShort NASDAQ-100 Fund (USPSX)
Mutual Fund’s 2024 Return: -35.34%
ProFunds UltraShort NASDAQ-100 Fund (USPSX) is a mutual fund for investors looking to short the tech-heavy Nasdaq 100. The fund seeks daily investment results before fees and expenses that are two times the inverse (-2x) of the daily performance of the Nasdaq-100 Index. Consequently, fund managers invest in financial instruments likely to produce daily returns consistent with the daily target.
Based on market capitalization, the fund comprises 100 of the biggest non-financial companies, both domestic and foreign, that are listed on The NASDAQ Stock market. The fund lacks diversification. Likewise, the mutual fund was always going to underperform the overall market given that the Nasdaq 100 has been trending upwards, attributed to gains in the technology sector due to AI-driven trades. After going down by about 57.43% in 2023, ProFunds UltraShort NASDAQ-100 Fund (USPSX) emerged as one of the worst-performing mutual funds in 2024 after returning -35.34%.
While we acknowledge the potential of ProFunds UltraShort NASDAQ-100 Fund (USPSX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than USPSX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
