If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink 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.
Loomis Sayles Limited Term G&A A (NEFLX): This fund has an expense ratio of 0.8% and a management fee of 0.37%. 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. NEFLX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Vanguard Precious Metals & Mining (VGPMX). Expense ratio: 0.38%. Management fee: 0.37%. Over the last 5 years, this fund has generated annual returns of -0.23%.
Intrepid Endurance Fund Investor (ICMAX): This fund has an expense ratio of 1.38% and management fee of 1%. ICMAX is a Small Cap Value mutual fund, investing in small companies with stock market valuation less than $2 billion. With an annual average return of 0.93% 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
There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.
Fidelity Japan Smaller Companies (FJSCX): Expense ratio: 0.93%. Management fee: 0.69%. FJSCX is part of the Japan - Equity category, which mostly invest in Japan-based companies; Japan is one of the world's richest and most diversified economies. This fund has achieved five-year annual returns of an astounding 11.54%.
BlackRock (NYSE:BLK) Advantage Large Cap Growth S (CMVSX): Expense ratio: 0.87%. Management fee: 0.57%. CMVSX 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. CMVSX has managed to produce a robust 12.17% over the last five years.
Oppenheimer Discovery R (ODINX) has an expense ratio of 1.33% and management fee of 0.63%. ODINX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With annual returns of 12.3% over the last five years, this fund is a well-diversified fund with a long track record of success.
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