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.
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.
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.
Timothy Plan Fixed-Income A (TFIAX): This fund has an expense ratio of 1.13% and a management fee of 0.6%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. TFIAX is classified in Investment Grade Bond - Intermediate fund category; these funds target the middle section of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
ProFunds Rising U.S. Dollar Investor (RDPIX). Expense ratio: 1.81%. Management fee: 0.6%. Over the last 5 years, this fund has generated annual returns of 1.36%.
Rydex S&P Small Cap 600 Pure Value H (RYAZX): This fund has an expense ratio of 1.62% and management fee of 0.75%. RYAZX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With an annual average return of 1.4% 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.
T. Rowe Price Cap Opportunity (PRCOX) is a fund that has an expense ratio of 0.66%, and a management fee of 0.49%. PRCOX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With yearly returns of 12.13% over the last five years, this fund clearly wins.
BlackRock (NYSE:BLK) Mid Cap Growth Equity A (BMGAX) has an expense ratio of 1.05% and management fee of 0.67%. BMGAX 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. Thanks to yearly returns of 14.24% over the last five years, BMGAX is an effectively diversified fund with a long reputation of solidly positive performance.
Lord Abbett Developing Growth I (LADYX): Expense ratio: 0.69%. Management fee: 0.51%. LADYX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. LADYX has produced a 10.09% over the last five years.
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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Zacks Investment Research