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.
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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.
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