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 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.
Hotchkis and Wiley Mid-Cap Value I (HWMIX): 1% expense ratio and 0.75% management fee. HWMIX is a Mid Cap Value mutual funds that aims to target medium-sized companies that possess strong value and income opportunities for investors. With a five year after-costs return of 0.77%, you're for the most part paying more in charges than returns.
AB Unconstrained Bond C (AGCCX): 1.65% expense ratio, 0.5% management fee. AGCCX is a Diversified Bonds investment option; these funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. This fund has an annual returns of -0.25% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Victory INCORE Low Duration Bond C (RLDCX): This fund has an expense ratio of 1.62% and management fee of 0.45%. RLDCX is an Investment Grade Bond - Short option; these funds focus on the short end of the curve, generally with bonds that mature in less than two years. With an annual average return of 0.81% 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 you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Dreyfus/Boston Small/Mid-Cap Growth I (SDSCX): 0.74% expense ratio and 0.6% management fee. SDSCX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With an annual return of 13.43% over the last five years, this fund is a winner.
Fidelity Advisor Growth Opportunit (FAOFX) has an expense ratio of 0.01% and management fee of 0%. FAOFX 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. Thanks to yearly returns of 18.84% over the last five years, FAOFX is an effectively diversified fund with a long reputation of solidly positive performance.
JPMorgan (NYSE:JPM) Tax Aware Equity Institutional (JPDEX) is an attractive fund with a five-year annualized return of 11.48% and an expense ratio of just 0.55%. JPDEX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset.
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