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 plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
Timothy Plan Emerging Markets C (TPECX): Expense ratio: 3.33%. Management fee: 1.2%. After expenses, the 5 year return is -2.19%, meaning your fees are far higher than the fund's returns.
Brandes Global Equity C (BGVCX). Expense ratio: 2%. Management fee: 1.2%. Over the last 5 years, this fund has generated annual returns of 1.83%.
Marketfield A (MFADX): This fund has an expense ratio of 2.63% and management fee of 1.4%. MFADX 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 -2.29% 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
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.
Hartford Core Equity R4 (HGISX) is a fund that has an expense ratio of 0.76%, and a management fee of 0.35%. HGISX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. With yearly returns of 11.96% over the last five years, this fund clearly wins.
BMO Large-Cap Growth Fund I (MLCIX) is a stand out fund. MLCIX 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 five-year annualized performance of 12.78% and expense ratio of 0.54%, this diversified fund is an attractive buy with a strong history of performance.
Principal Mid Cap R1 (PMSBX): Expense ratio: 1.47%. Management fee: 0.58%. PMSBX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. PMSBX has produced a 12.58% over the last five years.
Bottom Line
Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.
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Zacks Investment Research