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.
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.
Below, you'll read about some of the funds included in our current list of "Mutual Fund Misfires of the Market." And if by chance you're invested in any of these misfires, we'll help and review some of our highest Zacks Ranked mutual funds.
3 Mutual Fund Misfires
Now, let's take a look at three market misfires.
RBC Emerging Markets Small Cap Equity A (RSMAX): 1.7% expense ratio and 1.25% management fee. RSMAX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. With a five year after-costs return of 0.16%, you're for the most part paying more in charges than returns.
AQR Multi Strategy Alternative R6 (QSARX): QSARX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. QSARX offers an expense ratio of 1.87% and annual returns of -2.57% 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.
Invesco Long/Short Equity C (LSQCX): This fund has an expense ratio of 2.33% and management fee of 0.8%. LSQCX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. With an annual average return of -0.66% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
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.
Conestoga Smid Cap Institutional (CCSGX): Expense ratio: 0.85%. Management fee: 0.85%. CCSGX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. This fund has achieved five-year annual returns of an astounding 14.8%.
Royce International Premier Fund Investment (RIPNX) is a stand out fund. RIPNX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. With five-year annualized performance of 13.03% and expense ratio of 1.13%, this diversified fund is an attractive buy with a strong history of performance.
Victory Sycamore Established Value Y (VEVYX) is an attractive fund with a five-year annualized return of 10.4% and an expense ratio of just 0.63%. VEVYX is a Mid Cap Value mutual funds that aims to target medium-sized companies that possess strong value and income opportunities for investors.
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