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Worst Performing Mutual Funds of 2010

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Jan 7, 2011 4:49 pm

The five worst performing mutual funds for 2010 were mostly leveraged/inverse funds from ProShares and Direxion, and most of these funds still had pretty significant inflows last year. Do you think these funds were oversold by advisors or broker-dealers? If so, by who?

ProFunds UltraShort Small-Cap Inv (UCPIX)=Down -51.19%

Direxion Mthly Small Cap Bear 2X (DXRSX)=Down -50.13

Rydex Inverse Russell 2000 2x Strategy A (RYIUX)=Down -49.83

ProFunds UltraShort Mid-Cap Inv (UIPIX)=Down -46.84

Direxion Mthly NASDAQ-100 Bear 2X Inv (DXQSX)=Down -42.31

Jan 7, 2011 7:28 pm

Considering how many funds there are along with the added volaitility tossed into them, I'm very surprised that something wasn't down 99%.

This excessive packaging of funds, product, is a great example of why someone needs a good, professional assisting them.

I clearly remember back to 99 when everyone said that investing was/should be as simple as buying the sp500 index funds. Well, that didn't turn out very well, and every time the experts say that you should buy such and such index, because it always works....

Take the market, subtract the bubbles and the fraud, and you got something that "should" work.

Jan 8, 2011 12:03 am

Considering what the market did these funds should be down, right?  Add in the fact they are all subject to issues with contango and backwardation by using futures and leverage to create inverse/leveraged returns, and you see the result.

I don't like these funds, and I would never ever sell them, but measuring their performance over a year isn't really fair.  They aren't designed to be held over long periods of time, only for very short periods.  Not sure about the funds, but I know the leveraged ETFs reset daily.  Anybody who invests in them without knowing that deserves to lose all of their money.

I'm sure these firms would be able to tell you exactly which channels sold these funds, but if I had to guess the vast majority would be do-it-yourselfers at home in their PJs on the ETrade, etc. websites.  Some of the inflows might be due to professionals (or idiot advisors) using them properly to hedge over a short time period.

Which plain vanilla funds (holding actual stocks and bonds, not just derivatives) performed the worst?  At least compare apples to apples.

Jan 10, 2011 12:53 am

The major firms are not pushing those funds, in fact they are making it difficult for their reps to sell those funds.  They want little to do with the liability associated with them, primarily through slippage.   BTW, the post before this one is spam.  You guys seem to have a lot of that lately.