3 Great Funds Having a Lousy 2024

Russel Kinnel: Equity investing is a long game that requires patience and an understanding of how you unleash the power of compounding. Every equity fund has ups and downs. Even the best investors and even index funds endure losses along the way to positive returns. Looking back at a fund’s 10-year return might seem like a smooth ride, but it’s made up of a lot of losses and gains along the way. If you sell after a loss, you’ll miss out on the gains and turn excellent long-term returns for the fund into mediocre results for you.

Let’s look at three Gold-rated funds that are suffering a really lousy 2024. As the rating suggests, we still think the long-term outlook for these funds is strong.

3 Great Funds Having a Lousy 2024

1. Oakmark International OAKIX
2. Vanguard Dividend Growth VDIGX
3. Brown Capital Small Company Management BCSIX

Oakmark International is down about 4.5% through mid-November, giving it one of the worst returns in foreign large value. It is often feast or famine with this focused value fund. David Herro and team seek out solid companies trading at low prices, and they sometimes go through years like this. A big 26% weighting in Germany has really stung as top holding Bayer is down more than 30%, Continental is down 15%, and BMW is down 25%. If the fund’s rebound matches those in the past, you’ll be glad you held on, though.

Vanguard Dividend Growth has a nice 12% return in 2024, but that’s actually in the bottom 3% of the large-blend category. Focusing on dividend payers with the financial strength to steadily raise that payout means the fund is shopping in high-quality territory. These companies have strong balance sheets and often wide moats, but these companies tend to lag in rallies and outperform in flat to down markets. A big underweight in tech and poor selection in industrials also explain the sluggish performance.

Brown Capital Small Company Management would seem to have been set up for a big year. It’s about two-thirds tech and one-third healthcare but only has a 6% gain year to date, landing it in the bottom decile of its peer group for 2024. The fund avoided some of the more speculative names as it always has, and that hurt, but it’s also stock selection in general that hasn’t worked so well. On top of that, major outflows likely drove down the prices of fund holdings as the fund was forced to sell.

Watch 3 Super Risky Low-Risk Funds for more from Russel Kinnel.