You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.
First, let's break down some of the funds currently part of our "Mutual Fund Misfires of the Market." If you happen to have put your money into any of these misfires, we'll help assess some of our best Zacks Ranked mutual funds.
3 Mutual Fund Misfires
Now, let's take a look at three market misfires.
Clearbridge International Value C (SBICX): Expense ratio: 2%. Management fee: 0.75%. After expenses, the 5 year return is 0.81%, meaning your fees are far higher than the fund's returns.
Longleaf Partners Fund (LLPFX): 1.01% expense ratio, 0.78% management fee. LLPFX is an All Cap Value mutual fund, which invests in small, medium, and large-cap companies, though they end up focusing on bigger firms due to percentage of assets. This fund has an annual returns of 0.96% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Ivy Limited-Term Bond C (WLBCX) - 1.67% expense ratio, 0.46% management fee. WLBCX is an Investment Grade Bond - Short fund. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. WLBCX has generated annual returns of 1.02% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.
Congress Mid Cap Growth Retail (CMIDX): Expense ratio: 1.08%. Management fee: 0.6%. CMIDX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. This fund has achieved five-year annual returns of an astounding 10.65%.
Fidelity Blue Chip Growth K (FBGKX) has an expense ratio of 0.7% and management fee of 0.64%. FBGKX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. Thanks to yearly returns of 14.77% over the last five years, FBGKX is an effectively diversified fund with a long reputation of solidly positive performance.
DFA US Sustainability Core I (DFSIX) is an attractive fund with a five-year annualized return of 11.04% and an expense ratio of just 0.25%. DFSIX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset.
Bottom Line
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
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Zacks Investment Research