If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your 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.
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.
Brookfield Global Listed Infrastructure C (BGLCX): 2.1% expense ratio and 0.85% management fee. BGLCX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. With a five year after-costs return of 0.34%, you're for the most part paying more in charges than returns.
Catalyst Hedged Futures Strategy I (HFXIX): HFXIX 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. HFXIX offers an expense ratio of 2.08% and annual returns of -3.87% 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.
BTS Tactical Fixed Income C (BTFCX) - 2.24% expense ratio, 1% management fee. This fund has yielded yearly returns of 0.87% 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.
Janus Henderson Research I (JRAIX): Expense ratio: 0.62%. Management fee: 0.56%. JRAIX 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. This fund has achieved five-year annual returns of an astounding 11.5%.
ClearBridge Small Cap Growth IS (LMOIX) has an expense ratio of 0.78% and management fee of 0.75%. LMOIX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. Thanks to yearly returns of 11.21% over the last five years, LMOIX is an effectively diversified fund with a long reputation of solidly positive performance.
MFS Global Growth R6 (MWOKX) is an attractive fund with a five-year annualized return of 11.01% and an expense ratio of just 1.05%. MWOKX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations.
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