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.
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.
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.
Dreyfus Ultra Short Income D (DSDDX): 0.6% expense ratio and 0.25% management fee. DSDDX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. With a five year after-costs return of 0.37%, you're for the most part paying more in charges than returns.
Ashmore Emerging Markets Small Cap C (ESSCX): 2.52% expense ratio, 1.5%. ESSCX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has yearly returns of -0.63% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
James Alpha Multi-StrtgyAltIncFd I (JAIMX) - 3.14% expense ratio, 2% management fee. JAIMX is a Long Short - Equity fund, and these funds aim to minimize exposure to the broader market, taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. JAIMX has generated annual returns of 1.06% over the last five years. Ouch!
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.
Columbia Select Large Cap Equity Fund Z (NSEPX) is a fund that has an expense ratio of 0.55%, and a management fee of 0.76%. NSEPX 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 10.54% over the last five years, this fund clearly wins.
AB Discovery Growth Z (CHCZX) is a stand out fund. CHCZX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. With five-year annualized performance of 10.51% and expense ratio of 0.66%, this diversified fund is an attractive buy with a strong history of performance.
T. Rowe Price Blue Chip Growth Adviser (PABGX) has an expense ratio of 0.96% and management fee of 0.56%. PABGX is a part of the Large Cap Growth mutual fund category, which invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. With annual returns of 13.84% over the last five years, this fund is a well-diversified fund with a long track record of success.
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