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2017 might be remembered as the year in which you could make money by investing in almost anything. The Dow posted its ninth consecutive year of positive returns, gaining 25%, while the S&P 500 added 19% and the Nasdaq was up 28%. It’ll also be remembered as the year wherein cryptocurrencies became all the rage. Bitcoin started the year under $1,000, but finished it at nearly $15,000.
Many mutual funds also posted big gains in 2017, but not all. The industry, in general, is continuing to see net negative flows as ETFs keep taking away market share, but total mutual fund assets have been rising thanks to strong performances across most categories. Let’s take a look back at some of the best and worst performers of 2017.
The equity markets carried their strong post-election rally through 2017, thanks to a favorable backdrop of low interest rates, modest inflation, strong earnings growth, the promise of tax reform and a more lax regulatory environment. Many of the year’s biggest winners came from the technology sector, with robotics and Artificial Intelligence, in particular, being the hot themes. Market volatility hit record-low levels, which translated into a slow but steady climb for the markets. One of the year’s bigger disappointments was energy. The sector continued to struggle with cheap energy prices, despite promises from OPEC to cut production in order to shrink supplies.
Within the mutual fund industry, expenses remain the biggest theme. Fund companies continue to trim expense ratios in order to attract assets, with some of the biggest index funds charging 0.10% annually or less. The Department of Labor’s fiduciary rule is also forcing many money managers and financial advisors to reshape their business practices in order to comply with the new mandate to offer cheaper products and greater transparency and simplicity to clients.
Learn more about the Department of Labor’s fiduciary rule here.
While growth and tech were two of the market’s top performers in 2017, winners could be found in all corners.
| Ticker | Name | Expense Ratio | AUM ($ millions) | 2017 Return | 3-year Return |
|---|---|---|---|---|---|
| MCHFX | Matthews China Fund | 1.18% | $877.00 | 59.08% | 54.64% |
| OPGIX | Oppenheimer Global Opportunities Fund | 1.17% | $6,910.00 | 52.59% | 92.41% |
| FSPTX | Fidelity Select Technology Fund | 0.77% | $6,379.00 | 49.75% | 80.12% |
| FDGRX | Fidelity Growth Company Fund | 0.77% | $41,895.00 | 36.76% | 56.52% |
| BPTRX | Baron Partners Fund | 1.78% | $2,060.00 | 31.54% | 33.15% |
Fidelity Technology rode heavy bets in big names, such as Apple, Facebook, Alphabet, Tesla, Microsoft and Nvidia, to a solid year. The 35-year-old Fidelity Growth Company Fund has long been a solid performer, and 2017 was no exception. It followed a similar strategy with a nearly 50% weighting to the tech sector. Oppenheimer Global Opportunities Fund focuses more on small- and mid-cap companies around the world, but a 40% weighting to eurozone nations paid big dividends for this fund. The Baron Partners Fund is a very concentrated, very aggressive portfolio that can produce both big gains and big losses. Its strategy of focusing on growth companies with sustainable competitive advantages, such as Tesla and Charles Schwab, delivered in 2017. The Matthews China Fund benefited from a strong emerging markets rally. The region’s biggest tech names, Tencent Holdings and Alibaba, were among the fund’s top five holdings. Both doubled in value in 2017.
Click here to learn more about the current trends in mutual fund expenses.
2017 wasn’t kind to all mutual funds though. Many of this year’s losers had something to do with natural resources, while another one continued its awful long-term performance streak.
| Ticker | Name | Expense Ratio | AUM ($ millions) | 2017 Return | 3-year Return |
|---|---|---|---|---|---|
| IEYAX | Ivy Energy Fund | 1.41% | $644.00 | -13.10% | -10.30% |
| HSGFX | Hussman Strategic Growth Fund | 1.19% | $307.00 | -12.70% | -29.20% |
| FSESX | Fidelity Select Energy Services Portfolio | 0.85% | $437.00 | -12.50% | -12.10% |
| MLPDX | Oppenheimer SteelPath MLP Income A Fund | 1.49% | $3,500.00 | -7.84% | -18.60% |
| UNWPX | U.S. Global Investors World Precious Minerals Fund | 1.99% | $136.00 | -3.82% | 42.23% |
Fidelity Select Energy Services Portfolio, Ivy Energy Fund and Oppenheimer SteelPath MLP Income Fund all struggled amidst a challenging economic environment. Despite oil prices rising to $60 per barrel by year’s end, the highest level in two and a half years, volatility helped keep stronger sector returns at bay. The U.S. Global Investors World Precious Minerals Fund bucked the trend in an otherwise up year for gold miners, as its top holding, Klondex Mines with a 17% weighting, plunged in value by nearly half in 2017. The Hussman Strategic Growth Fund’s objective of using both long and short exposures to maximize returns in all market environments has produced dismal results, with 2017 marking the fund’s sixth consecutive year of negative returns.
Are active fund managers worth it? Decide for yourself here.
2017 produced far more winners than losers, with returns of 50% or greater not uncommon. As we roll into 2018, it’s important to keep longer-term performance, along with expense ratios and personal objectives, in mind when choosing a fund. These funds produced results on the extreme ends of the spectrum, but 2018 will tell a whole new story.
Be sure check our News section to keep track of recent fund performances.
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