Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.
How can you tell a good mutual fund from a bad one? It's pretty basic: If the fund has high fees and performs poorly, it's not good. Of course, there's a range - but when a mutual fund earns a Zacks Rank of #5 (Strong Sell) that means it's among the worst of roughly 19,000 funds we rate each 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.
BlackRock (NYSE:BLK) Eurofund C (MCEFX): This fund has an expense ratio of 2.14% and a management fee of 0.75%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. MCEFX is one of many Europe - Equity mutual funds, which are known for investing their assets in stocks based in countries like Great Britain, Germany, France, Italy, and Spain. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Federated Government Income Securities C (FGOCX): 1.76% expense ratio, 0.6%. FGOCX is part of the Government Mortgage - Intermediate fund section. Government Mortgage - Intermediate funds focus on the mortgage-backed security (MBS) market and securities that usually have at least three years to maturity but less than 10. This fund has yearly returns of 1.07% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Aquila Hawaiian Tax Free Trust C (HULCX) - 1.68% expense ratio, 0.23% management fee. This fund has yielded yearly returns of 0.96% in the course of the last five years. Too bad!
3 Top Ranked Mutual Funds
There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.
DFA Continental Small Company I (DFCSX): Expense ratio: 0.56%. Management fee: 0.6%. DFCSX is one of many Europe - Equity mutual funds, which are known for investing their assets in stocks based in countries like Great Britain, Germany, France, Italy, and Spain. This fund has achieved five-year annual returns of an astounding 10.02%.
AB Small Cap Growth A (QUASX) is a stand out fund. QUASX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With five-year annualized performance of 12.8% and expense ratio of 1.15%, this diversified fund is an attractive buy with a strong history of performance.
Vanguard PRIMECAP Fund Investor (VPMCX) has an expense ratio of 0.38% and management fee of 0.37%. VPMCX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With yearly returns of 11.94% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
Bottom Line
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
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Zacks Investment Research