3 Good Funds Having a Terrible Year

Russel Kinnel: Sometimes bad things happen to good funds. We should expect our funds to stick to their strategy and deliver value over the long haul, but in a single year, it’s certainly possible for a good fund strategy to be out of favor. Even the best funds have single years of underperformance.

In 2025, many of the lower quality, more speculative stocks have done the best. As a result, I’m in a fairly forgiving mood. So let’s look at three funds that are actually quite good, despite poor results in 2025.

3 Good Funds Having a Terrible Year

1. Wasatch Core Growth WGROX
2. Diamond Hill Large Cap DHLAX
3. GQG Partners US Select Quality Equity GQEPX

Wasatch Core Growth WGROX seeks out quality growth stocks that produce steady growth and hold up well in downturns. Unfortunately, the market hates those stocks right now. The fund is down 9% in a year when most funds are well into the black. Over the course of 2024 and early 2025, longtime lead manager J.B. Taylor stepped down from lead manager and then from the team altogether. But the link with poor performance appears to be largely a coincidence. The fund typically has a turnover in the range of 30%, so it’s not like it’s the new managers that threw out all of Taylor’s stocks and added their own. If quality rebounds next year and the fund is still in the dumps, then the picture will look quite different. But for now, we’re keeping our Silver rating on the fund.

Diamond Hill Large Cap DHLAX is another fund where the manager probably can’t wait to flip the calendar. The fund’s 3% year-to-date gain is in the bottom percentile of its category. The idea here is to find good values by looking for companies with the balance sheets and strong cash flows to rebound from depressed levels. That leads them to some well-known but sleepy name brands like Colgate-Palmolive CL, Waste Management WM, and ConocoPhillips COP. All three are down double digits this year, but you can certainly see the case for a rebound.

Finally, Rajiv Jain’s funds are likewise getting hammered. Jain had been a huge fan of Nvidia NVDA and other AI plays, but in early 2025, he decided AI was in bubble territory, and he unloaded Nvidia and most of his other tech holdings with AI exposure. Unfortunately, those stocks continued to surge ahead, though they gave back some of those gains in November. But GQG Partners US Select Quality Equity GQEPX is down 4% on the year, placing it in the bottom percentile of large blend. Meanwhile, some of the value names he added, like Cigna CI, are in the red. Jain has a history of flexibly moving around the style box based on what he likes most, and it usually turns out well. I own his Emerging Markets Fund, which has also had a poor year. We rate this fund Silver and think there’s a chance better days are ahead.

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