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.
The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.
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.
America First Income Trends I (AFPIX): Expense ratio: 1.56%. Management fee: 1.25%. After expenses, the 5 year return is 0.77%, meaning your fees are far higher than the fund's returns.
Leader Total Return Institutional (LCTIX): 1.88% expense ratio, 0.75%. LCTIX is an Investment Grade Bond - Intermediate fund, which targets bonds that mature in more than three years but less than 15 years, and are a middle of the curve option for investors. This fund has yearly returns of 1.74% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Templeton Frontier Markets Adviser (FFRZX) - 1.71% expense ratio, 1.4% management fee. This fund has yielded yearly returns of -3.05% in the course of the last five years. Too bad!
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.
Great-West Multi Manager Large Cap Growth (MXLGX): 1% expense ratio and 0.64% management fee. MXLGX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With an annual return of 13.76% over the last five years, this fund is a winner.
MFS Mid-Cap Growth Fund R2 (MCPRX): Expense ratio: 1.34%. Management fee: 0.71%. MCPRX 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. MCPRX has managed to produce a robust 13.39% over the last five years.
Oppenheimer Gold & Special Mineral Y (OGMYX) has an expense ratio of 0.92% and management fee of 0.68%. Sector - Precious Metal funds like OGMYX normally invest in stocks focused on the mining and production of precious metals such as gold, silver, platinum, and palladium. With annual returns of 11.5% over the last five years, this fund is a well-diversified fund with a long track record of success.
Bottom Line
These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).
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Zacks Investment Research