One of the key aspects of financial planning is portfolio diversification. Experts keep saying don’t put eggs in one basket. Some critics would thrash it out. They say we want to make it simple and invest in 1-2 mutual funds. What if such investors end up generating peanuts in their investments in long term of say 10 years? In this article we would talk about 5 Worst Performing Mutual Funds in the last 10 years (15-Mar-2013 to 14-Mar-2024) that have generated low returns, along with our view about such funds. This would help investors not to get into any trap and screw up their investments.
Also Read: 20 Mutual Funds with Positive Returns every year in last 10 years
How did we filter out the worst performing mutual funds over the last 10 years?
We considered all equity mutual funds, including sector funds and thematic mutual funds, but we excluded ETFs for this analysis.
Since we focused on the past 10 years’ performance, any fund launched within the last 10 years is not included in this list.
To identify the worst performers, we sorted the funds based on their returns over the last 10 years and selected the bottom 10 funds with the lowest returns.
These 10 mutual funds generated annualized returns ranging from 1% to 5.1%.
You might be wondering when stock markets have generated handsome returns in the last 10 years, how come such funds generating low returns. Let’s get into more details about such funds.
List of Top 5 Worst Performing Mutual Funds in last 10 years
Here are the top 5 mutual funds that generated 1% to 5% annualised returns in the last 10 years.
#1 – PGIM India Emerging Markets Equity Fund – 10 Years Annualised Returns – 1.3%
#2 – DSP World Agriculture Fund – 10 Years Annualised Returns – 2.6%
#3 – DSP World Energy Fund – 10 Years Annualised Returns – 2.6%
#4 – DSP World Gold FoF – 10 Years Annualised Returns – 3.1%
#5 – Invesco India – Invesco Pan European Equity FoF – 10 Years Annualised Returns – 5.3%
5 Worst Performing Mutual Funds in the Last 10 Years – Deep Dive into these funds
#1 – PGIM India Emerging Markets Equity Fund –Annualised Returns in last 10 Years – 1.3%
Investment Objective:
The primary investment objective of the scheme is to generate long term capital growth from investing in the units of PGIM Jennison Emerging Markets Equity Fund, which invests primarily in equity and equity-related securities of companies located in or otherwise economically tied to emerging market countries.
Performance Details
Absolute Returns of the fund (Direct Plan)
- 1-Year Return: 22.9%
- 2-Year Return: 3.86%
- 3-Year Return: minus 23.8%
- 5-Year Return: 8.7%
- 10-Year Return: 14.4%
Annualised Returns of the fund (Direct Plan)
- 1-Year Return: 12.9%
- 2-Year Annualised Return: 1.9%
- 3-Year Annualised Return: minus 8.6%
- 5-Year Annualised Return: 1.6%
- 10-Year Annualised Return: 1.3%
Our View:
- This is a global mutual fund that invests in another fund focused on rapidly growing companies around the developing world.
- Its underlying fund invests 28% in India, 23% in Taiwan, 13% in China, 11% in Brazil etc.,
- Its top 10 holdings include Makemytrip, Taiwan Semiconductor, Mercodolibre, XP-Class A, NU/Cayman Islands, Varun Breverages, Alchip Technologies, M&M, PDD and ASPEED Technologies.
- This fund has generated 3.4% annualised returns since inception.
- Like I indicated in our earlier article, according to a CNN report, China stock markets have lost USD 6 trillion in the last 3 years due to various problems including a record downturn in real estate, deflation, debt, a falling birthrate and shrinking workforce, as well as a shift towards ideology-driven policies that has rattled the private sector and scared away foreign firms.
- China’s market has been underperforming for the last 3 years, with no sign of revival at this point. On the other hand, Taiwan’s stock markets crashed by over 30% in 2022 but have since recovered in the last 1.5 years.
- If you have already invested in such mutual funds, you may consider holding for some more time. Avoid making any fresh investments or SIPs now.
#2 – DSP World Agriculture Fund – Annualised Returns in last 10 Years – 2.6%
Investment Objective:
The primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in units of BlackRock Global Funds – Nutrition Fund (BGF – NF).
The underlying fund invests globally at least 70% of its total assets in the equity securities of companies engaged in any activity forming part of the food and agriculture value chain, including packaging, processing, distribution, technology, food- and agriculture-related services, seeds, agricultural or food-grade chemicals and food producer
Performance Details
Absolute Returns of the fund (Direct Plans)
- 1-Year Return: minus 3.4%
- 2-Year Return: minus 12.2%
- 3-Year Return: minus 18.8%
- 5-Year Return: 15.7%
- 10-Year Return: 31.3%
Annualised Returns of the fund (Direct Plans)
- 1-Year Return: minus 3.4%
- 2-Year Return: minus 6.2%
- 3-Year Return: minus 6.7%
- 5-Year Return: 2.9%
- 10-Year Return: 2.6%
Our View:
- This is an international fund, and the underlying fund primarily invests in companies within the food and agricultural value chain.
- The top 10 holdings of its underlying fund include Graphic Packaging, Nestle SA, Compass Group, Zoetis, John Bean Tech, China Mengniu, Bungle Global, Smurfit Kappa, Avery Dennison Corp, and Costco Wholesale Corp.
- This fund has generated 3.8% annualised returns since inception. The hidden fact is that the underlying fund has generated zero returns in the last 12.5 years.
- If you have invested in such funds, you may review and exit appropriately.
You may like: 5 Mutual Fund Schemes with 20-Year Returns between 3,370% to 4,700%
#3 – DSP World Energy Fund – Annualised Returns in last 10 Years – 2.6%
Investment Objective:
An open ended Fund of Funds Scheme seeks to generate capital appreciation by investing predominantly in the units of BlackRock Global Funds – World Energy Fund (BGF-WEF) and BlackRock Global Funds – Sustainable Energy Fund (BGF – SEF).
Performance Details
Absolute Returns of the fund (Direct Plans)
- 1-Year Return: 4.7%
- 2-Year Return: 17.6%
- 3-Year Return: 16.2%
- 5-Year Return: 41.5%
- 10-Year Return: 31.9%
Annualised Returns of the fund (Direct Plans)
- 1-Year Return: 4.7%
- 2-Year Return: 8.4%
- 3-Year Return: 5.1%
- 5-Year Return: 7.1%
- 10-Year Return: 2.8%
Our View:
- This is a global fund that invests in ETFs investing in companies in the energy sector.
- This fund has generated 4.5% annualised returns since inception.
- However, this fund has been underperforming and generated only 2.8% annualised returns in the last 10 years. If you have already invested, reconsider your decision and exit such funds if possible.
#4 – DSP World Gold Fund FoF – Annualised Returns in last 10 Years – 3.1%
Investment Objective:
The primary investment objective of the Scheme is to seek capital appreciation by investing in units/securities issued by overseas Exchange Traded Funds (ETFs) and/or overseas funds and/or units issued by domestic mutual funds that provide exposure to Gold/Gold Mining theme. The Scheme may also invest a certain portion of its corpus in money market securities and/or money market/liquid schemes of DSP Mutual Fund, in order to meet liquidity requirements from time to time. However, there is no assurance that the investment objective of the Scheme will be realized.
Performance Details
Absolute Returns of the fund (Direct Plans)
- 1-Year Return: 4.6%
- 2-Year Return: minus 11.5%
- 3-Year Return: 0.7%
- 5-Year Return: 47.9%
- 10-Year Return: 41%
Annualised Returns of the fund (Direct Plans)
- 1-Year Return: 4.6%
- 2-Year Return: minus 5.9%
- 3-Year Return: 0.2%
- 5-Year Return: 8.1%
- 10-Year Return: 3.1%
Our View:
- This is an international fund and underlying fund invests primarily in ETFs or mutual funds with exposure to gold or gold mining companies.
- The top-10 holdings of the underlying funds include Barric Gold Crop, Gold Fields, Endeavour Mining, Agnico Eagle Mines, B2Gold Corp, Wheaton Precious Metals, Northern Star Resources, Alamos Gold, Newmont Corporation and Kinross Gold Corp.
- This fund has generated minus 0.33% annualised return since inception of the direct plan from Jan-2013. Means you would have not nothing if you invested 10 years back.
- If you have invested in such funds, you may review and exit appropriately.
#5 – Invesco India – Invesco Pan European Equity FoF – Annualised Returns in last 10 Years – 5.3%
Investment Objective:
The scheme aims to invest predominantly in units of Invesco Pan European Equity Fund, an overseas equity fund which invests primarily in equity securities of European companies with an emphasis on larger companies.
The underlying fund aims to provide long-term capital growth by investing in a portfolio of equity or equity related instruments of European companies with an emphasis on larger companies.
Performance Details
Absolute Returns of the fund (Direct Plan)
- 1-Year Return: 15.3%
- 2-Year Return: 33.2%
- 3-Year Return: 36.5%
- 5-Year Return: 61.7%
- 10-Year Return: 72.3%
Annualised Returns of the fund (Direct Plan)
- 1-Year Return: 15.3%
- 2-Year Return: 15.3%
- 3-Year Return: 10.9%
- 5-Year Return: 10%
- 10-Year Return: 5.3%
Our View:
- This is an international fund and underlying fund invests in large European companies.
- The top-10 holdings of the underlying fund are Total, Roche NES, AstraZeneca, UPM-Kymmene, Merck, UniCredit, BP, Capgemini, Deutsche Telekom and Sanof.
- This fund has generated 5.3% annualised returns since inception of direct plan.
- We could see the revival in the performance in the last 5 years.
- If you have invested in such funds, continue to hold for some more time before you take decision to exit.
Also Read: 10 Worst Performing Mutual Funds in the last 1 Year
Conclusion on these funds:
When investing in mutual funds, avoid concentrating your investments in just 1-2 funds. Diversify your portfolio across different Asset Management Companies (AMCs) and across various market capitalizations.
If you observe, majority of the above funds are global or international mutual funds. If you would have diversified your portfolio across domestic and international equity and across market capitalization, even if any such funds underperform, other funds in your portfolio would have balanced it. You can still expect 12% to 15% annualised return with such diversified portfolio of funds.
