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20 Worst Bond Fund Returns of 2018 Feature Debt & Emerging Market Funds

Most of the 20 worst performing fixed-income funds in 2018 had three things in common: first, they trended toward significant holdings in corporate debt. Second, the funds held an average expense ratio of 70 basis points, which was nearly 20 points higher than the products with the highest returns in 2018. Finally, to a lesser extent, a fair number of the worst-performers on the list were funds tied to emerging/developing world markets.

According to Financial-Planningand Morningstar, the 20 worst performing bonds for the 2018 year include:

Rank

Fund Name

Symbol

2018 Returns

Expense Ratio

20

Loomis Sayles Investment Grade Bond Y

LSIIX

0.94%

0.53%

19

iShares TIPS Bond ETF

TIP

0.94%

0.20%

18

Vanguard Inflation-Protected Secs Inv

VIPSX

0.93%

0.20%

17

Cohen & Steers Preferred Sec & Inc

CPXIX

0.88%

0.85%

16

Oppenheimer Senior Floating Rate A

OOSAX

0.78%

1.13%

15

Lord Abbett High Yield A

LHYAX

0.74%

0.89%

14

Fidelity Advisor Strategic Income

FSIAX

0.72%

0.99%

13

iShares JP Morgan USD Em Mkts Bd ETF

EMB

0.67%

0.40%

12

T. Rowe Price Spectrum Income M

RPSIX

0.66%

0.65%

11

Lord Abbett Bond-Debenture A

LBNDX

0.60%

0.80%

10

Vanguard Long-Term Investment-Grade Inv

VWESX

0.59%

0.22%

9

MFS Emerging Markets Debt I

MEDIX

0.20%

0.82%

8

T. Rowe Price Emerging Markets Bond

PREMX

-0.03%

0.92%

7

TCW Emerging Markets Income I

TGEIX

-0.37%

0.87%

6

Loomis Sayles Strategic Income A

NEFZX

-0.37%

0.96%

5

AB High Income A

AGDAX

-1.03%

0.82%

4

American Funds Capital World Bond A

CWBFX

-1.24%

0.97%

3

Fidelity New Markets Income

FNMIX

-1.34%

0.82%

2

JHancock Strategic Income Opps NAV

JHSEX

-1.52%

0.65%

1

VanEck Vectors JP Morgan EM LC Bd ETF

EMLC

-5.72%

0.30%

Most of the listed bonds are new to the worst-performers list, although #11 Lord Abbett Bond-Debenture A (LBNDX) appeared as part of our January 2016 "10 High-Yield Bond Funds Posting Largest Negative Returns over Past Year" article.

Others, such as #9 MFS Emerging Markets Debt I (MEDIX) not only are exposed to corporate credit, but also are related to emerging/frontier markets, which we previously identified as a risky area. #7 TCW Emerging Markets Income I (TGEIX), #4 American Funds Capital World Bond A (CWBFX), and #3 Fidelity New Markets Income (FNMIX) are other such examples.

The final outlier—#1 VanEck Vectors JP Morgan EM Local Currency Bond ETF (EMLC)—experienced a 2018 return nearly five times worse than #2 JHancock Strategic Income Opps NAV (JHSEX), and despite recent interest due to EMLC's significant drop in value, the fund is once again headed in a downward direction.

Reading a bit about EMLC from VanEck indicates this particular bond is tied to the JP Morgan GBI-EM Global Core Index, which is a fancy way of saying that EMLC is yet another emerging/frontier market fund.

If you have invested with any broker or financial adviser in a poorly performing bond fund or ETF that has proven harmful to your investments or interests due to the unsuitable level of risk posed by investing in an emerging markets product, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

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The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
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