5 Worst Performing Mutual Funds in last 5 years (-1.5% to 4.2% Annualized Returns)

Are you investing your portfolio to just a couple of mutual funds to avoid clutter? While it might be good, it’s crucial to consider the risk if those funds underperform in the medium to long term. Diversifying your mutual fund portfolio can help mitigate such risks and ensure a more stable investment strategy. In this article we would talk about 5 Worst Performing Mutual Funds in the last 5 years (1-Apr-2014 to 31-Mar-2024) that have generated negative or low returns, along with our view about such funds. This would help investors not to get into any trap and screw up their investments.

Some of these funds are even part of our earlier article – 5 Worst Performing Mutual Funds in the last 10 years.

How did we filter the worst performing funds over the last 5 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 5 years’ performance, any fund launched in the last 5 years is not included in this list.
• To identify the worst performing funds, we sorted the funds based on their returns over the last 5 years and selected the bottom 5 funds with the lowest returns.
• These 5 mutual funds generated annualized returns ranging from -1.5% to 4.2%.
• You might wonder that when stock markets have reached peak, how come these funds are under performing in the last 5 years. Let’s get into more details about such funds.

List of Top 5 Worst Performing Mutual Funds in the Last 5 Years

Here are the top 5 mutual funds that generated annualized returns ranging from -1.5% to +4.2% over the last 5 years:

#1 – HSBC Brazil Fund – 5 Years Annualized Returns: –1.5%

#2 – PGIM India Emerging Markets Equity Fund – 5 years Annualized Returns: +2%

#3 – Franklin India Feeder Templeton European Opp Fund – 5 Year Annualized Returns: +2.4%

#4 – DSP World Agriculture Fund – 5 years Annualized Returns: +3.25%

#5 – Franklin Asian Equity Fund – 5 years Annualized Returns: +4.2%

5 Worst Performing Mutual Funds in the Last 5 years – Deep Dive into these funds

#1 – HSBC Brazil Fund – 5 Years Annualized Returns – Negative 1.55%

Investment Objective:

The primary investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in units/shares of HSBC Global Investment Funds (HGIF) Brazil Equity Fund.

Performance Details

Absolute Returns of the fund (Direct Plan)

• 1-Year Return: 22.6%
• 3-Year Return: 13%
• 5-Year Return: Negative 7.5%

Annualized Returns of the fund (Direct Plan)

• 1-Year Return: 22.6%
• 3-Year Annualized Return: 4.1%
• 5-Year Annualized Return: Negative 1.5%
• 10-Year Annualized Return: Not Applicable

Our View:

• This is a global mutual fund that invests in another fund, focusing on companies in Brazil.
• Its underlying fund allocates 96% to Brazilian equity and 4% to TREPS.
• Top 10 holdings include Banco Bradesco SA, Vale Do Rio Doce, Petroleo Brasileiro SA Petrobras, Banco BTG Pactual SA, WEG SA, Itau Unibanco Holding SA, B3 SA Brasil Bolsa Balcao, Localiza Rent a Car SA, Basic Sanitation Company of the State of Sao Paulo, and Prio SA.
• The fund has generated 1.5% annualized returns since inception.
• According to a report from Nasdaq on the Brazil Stock Market, anticipated further decline in inflation to 4% by the close of 2024 suggests considerable potential for interest rate reductions, expected to provide favorable support for both equities and bonds in Brazil.
• 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 – PGIM India Emerging Markets Equity Fund – Annualized Returns in last 5 years – 2%

Investment Objective:

This fund invests in another fund named PGIM Jennison Emerging Markets Equity Fund. The primary investment objective of the scheme is to generate long-term capital growth by investing in the units of PGIM Jennison Emerging Markets Equity Fund, which primarily invests in equity and equity-related securities of companies located in or economically tied to emerging markets countries.

Performance Details

Absolute Returns of the fund (Direct Plan)

• 1-Year Return: 20.6%
• 3-Year Return: Negative 20.3%
• 5-Year Return: 10.4%

Annualized Returns of the fund (Direct Plan)

• 1-Year Return: 20.6%
• 3-Year Annualized Return: Negative 7.3%
• 5-Year Annualized Return: 2%
• 10-Year Annualized 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 currently invests in India, Taiwan, China, Brazil, South Korea, etc.
• Top 10 holdings include Makemytrip, Taiwan Semiconductor, Mercadolibre, XP-Class A, NU Holdings, Varun Beverages, M&M, Alchip Technologies, PDD, and HPSP Co Ltd.
• This fund has generated 3.5% annualized returns since inception.
• If you have already invested in such mutual funds, you may consider holding for some more time before exiting. Avoid making any fresh investments or SIPs now.

#3 – Franklin India Feeder – Templeton European Opportunities Fund  – Annualized Returns in last 5 years – 2.4%

Investment Objective:

The fund seeks to provide capital appreciation by investing predominantly in units of Franklin European Growth Fund, an overseas equity fund which primarily invests in securities of issuers incorporated or having their principal business in European countries.

Performance Details

Absolute Returns of the fund (Direct Plans)

• 1-Year Return: 3.5%
• 3-Year Return: 11.8%
• 5-Year Return: 12.6%
• 10-Year Return: NA

Annualized Returns of the fund (Direct Plans)

• 1-Year Return: 3.5%
• 3-Year Return: 3.8%
• 5-Year Return: 2.4%
• 10-Year Return: NA

Our View:

• This is a global fund that invests in another fund that invests in companies where their principal business in European Countries.
• Its top 10 equity holdings are Adecco Group AG, Albemarle Corp, Alphabet Inc, Amazon.com Inc, Anheuser-Busch InBev SA/NVm, BAE Systems, BAE Systems, Barratt Developments, Booking Holdings, and BP Inc.
• This fund has generated 1% Annualized returns since inception.
• With only 2.4% annualized returns in the last 5 years, this fund has been underperforming. If you have already invested, you can hold for some more time.

#4 – DSP World Agriculture Fund – Annualized Returns in last 5 years – 3.8%

Investment Objective:

The fund would predominantly invest in units of BlackRock Global Funds – Nutrition Fund. In addition to this, a certain portion of its corpus will be invested in money market securities and/or money market/ liquid schemes of DSP BlackRock Mutual Funds, in order to meet liquidity requirements from time to time.

Performance Details

Absolute Returns of the fund (Direct Plans)

• 1-Year Return: Negative 6%
• 3-Year Return: Negative 19.4%
• 5-Year Return: 17.3%
• 10-Year Return: 32.3%

Annualized Returns of the fund (Direct Plans)

• 1-Year Return: Negative 6%
• 3-Year Return: Negative 6.9%
• 5-Year Return: 3.2%
• 10-Year Return: 2.8%

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 underlying fund has generated 1.5% Annualized returns since inception.
• If you have invested in such funds, you may hold for some more time.

#5 – Franklin Asian Equity Fund – Annualized Returns in last 5 years – 4.2%

Investment Objective:

The scheme aims to provide medium to long term capital appreciation through investment in Asian companies/sectors, excluding Japan.

Performance Details

Absolute Returns of the fund (Direct Plans)

• 1-Year Return: 1.7%
• 3-Year Return: Negative 15.4%
• 5-Year Return: 22.8%
• 10-Year Return: 95.5%

Annualized Returns of the fund (Direct Plans)

• 1-Year Return: 1.7%
• 3-Year Return: Negative 5.4%
• 5-Year Return: 4.2%
• 10-Year Return: 6.9%

Our View:

• This is a global fund that invests in another fund that invests in companies where their principal business in European Countries.
• Its top 10 equity holdings are Taiwan Semiconductor Manufacturing Co, Samsung Electronics, Tencent Holdings, AIA Group, Hyundai Motor, Alibaba Group, Zomato, SK Hynix, Bank Central Asia and ICICI Bank.
• As indicated in our article articles slowdown in China and Taiwan has resulted in under performing of these stock markets. This might continue for some more time.
• This fund has generated 6.9% Annualized returns since inception.
• This fund has been underperforming and generated only 2.4% Annualized returns in the last 5 years. If you have already invested, hold for some more time.
• This fund was part of our earlier article on 5 Worst Performing Mutual Funds in the last 1 year.

Conclusion on these funds:

Investing in mutual funds should be based on financial goals, risk appetite, and investment tenure.

A diversified mutual fund portfolio can be built with large-cap, mid-cap, small-cap, flexi-cap, and global funds. Investors can consider selecting 6-8 mutual funds across these categories. Even if a couple of mutual funds underperform, other schemes can potentially compensate, which can help investors to generate good returns.

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Suresh KP

Founder at Myinvestmentideas.com

Suresh KP is a seasoned financial expert with over 20 years of experience. He is NISM Certified Investment Adviser and Research Analyst. For more about his expertise and certifications, visit About Suresh KP

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