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The Eight Most Shocking Losses of the Past 12 Months

No one saw losses this big at these funds.

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December finished on a note of optimism, but January was a return to the markets grinding lower amid grim economic news. A tidal wave of layoffs has everyone talking about depression, and we've gotten more losses in the mutual fund world.

Today, I'll look at some of the funds with the most surprising losses over the 12 months ended in January. I'll skip over high-risk, high-cost funds where losses really aren't a surprise. ProFunds UltraLatin America (UBPIX), Frontier MicroCap (FEFPX), and Third Millennium Russia (TMRFX) lost 86%, 76%, and 76%, respectively, but that's not a shock. After all, we had these funds on our  Analyst Pans list. Instead, I'll focus on those that few would have guessed could lose as much as they did and some of the lessons learned.

1. Helios Select Intermediate Bond (HSIBX), negative 85%
2. Helios Select Short/Term Bond (MSBIX), negative 78%
3. Helios Select High Income (HIFIX), negative 79%
These are the funds formerly known as Regions. They got burned by subprime and debt from banks and other financial issuers. Before last year, cases of a bond fund losing more than half its value were extremely rare. But their returns show just how brutal a combination of a bad bet, vanishing liquidity, and heavy redemptions can be. In July 2008, management of the funds switched to Hyperion Brookfield from Regions, but the funds are still suffering. Select Intermediate lost 15% just in January. Ninety-nine times out of 100, panicking is the worst thing that you can do. But in this case, panicking and redeeming at any price was the right thing to do because redemptions and sickly portfolios put these funds in a nasty downward spiral.

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Russel Kinnel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.