If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your 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.
Hotchkis and Wiley Mid-Cap Value I (HWMIX): Expense ratio: 1%. Management fee: 0.75%. After expenses, the 5 year return is 0.77%, meaning your fees are far higher than the fund's returns.
Ivy Limited-Term Bond C (WLBCX): 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 offers an expense ratio of 1.67% and annual returns of 1.02% 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.
MainStay International Opportunities C (MYICX) - 2.66% expense ratio, 1.1% management fee. MYICX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. MYICX has generated annual returns of 1.15% over the last five years. Ouch!
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.
PIMCO StocksPLUS A (PSPAX) is a winner, with an expense ratio of just 0.9% and a five-year annualized return track record of 10.29%.
BlackRock (NYSE:BLK) Mid Cap Growth Equity A (BMGAX): Expense ratio: 1.05%. Management fee: 0.67%. BMGAX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. BMGAX has managed to produce a robust 14.24% over the last five years.
Columbia Select Large Cap Growth Z (UMLGX) is an attractive fund with a five-year annualized return of 11.79% and an expense ratio of just 0.86%. UMLGX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks.
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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