Equity Funds Suffer Largest Quarterly Decline in Two Years for Q2, with an Average 14.26% Loss

After the first 75-basis-point interest rate hike since 1994, increasing inflationary concerns, fear of a possible recession, aggressive posturing by Federal Reserve officials, and ongoing war following Russia’s invasion of Ukraine, equities and fixed income securities were hammered during the quarter, with equity mutual funds posting their worst quarterly decline since Q1 2020. For Q2 2022, the average equity fund suffered a 14.26% loss—bringing the year-to-date drubbing to a whopping 18.80%. Refinitiv Lipper’s U.S. Alternative Funds macro-classification (-0.44%) outpaced or mitigated losses better than the other six major equity groups for the first quarter in 10. For June, the average equity fund declined 7.84%—its largest monthly loss since March 2020.

For the quarter, only four of Lipper’s 104 equity and mixed-assets fund classifications posted positive returns. In total, only 2.48% of all individual equity and mixed-assets funds posted plus-side returns for the quarter.

In this segment, I highlight the second quarter and June performance results for equity mutual funds and ETFs.

Summary:

• For Q2 2022, equity funds (-14.26% on average) posted their second consecutive quarterly loss.
• Lipper’s Alternative Equity Funds macro-classification (-0.44%) mitigated losses better than the other six broad-based equity groups, followed by Commodities Funds (-6.09%) and Mixed-Assets Funds (-11.50%).
• The Dedicated Short Bias Funds (+27.52%) classification posted the strongest returns in the equity universe for Q2.
• The Equity Leverage Funds classification posted the largest losses in the equity universe, declining 30.96% for the quarter.
• China Region Funds (+2.88%) posted the only plus-side returns in the World Equity Funds macro-group (-13.68%).