If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your advisor.
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.
Saratoga Investment Quality Bond I (SIBPX): 1.27% expense ratio and 0.55% management fee. SIBPX is a Government Bond - Long fund. These mutual funds hold securities issued by the U.S. federal government, focus on the long end of the curve, and are seen as low-risk investments. With a five year after-costs return of 0.83%, you're for the most part paying more in charges than returns.
Timothy Plan Conservative Growth A (TCGAX): TCGAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. TCGAX offers an expense ratio of 1.08% and annual returns of 0.37% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.
Wells Fargo (NYSE:WFC) Short Duration Government C (MSDCX) - 1.56% expense ratio, 0.35% management fee. MSDCX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. MSDCX has generated annual returns of 0.3% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Baird Midcap Institutional (BMDIX): 0.81% expense ratio and 0.75% management fee. BMDIX 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. With an annual return of 11.5% over the last five years, this fund is a winner.
PIMCO StocksPLUS A (PSPAX) is a stand out fund. PSPAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. With five-year annualized performance of 10.29% and expense ratio of 0.9%, this diversified fund is an attractive buy with a strong history of performance.
Jensen Quality Growth Fund J (JENSX) has an expense ratio of 0.86% and management fee of 0.49%. JENSX 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 annual returns of 13.06% over the last five years, this fund is a well-diversified fund with a long track record of success.
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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