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.
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.
EuroPac International Bond Fund A (EPIBX): Expense ratio: 1.15%. Management fee: 0.6%. After expenses, the 5 year return is -1.08%, meaning your fees are far higher than the fund's returns.
Snow Capital Small Cap Value C (SNWCX): 2.24% expense ratio, 0.95%. SNWCX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. This fund has yearly returns of -0.6% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Arbitrage Tactical Equity I (ATQIX): Expense ratio: 2.18%. Management fee: 1.25%. ATQIX 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. With annual returns of just 0.86%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Sarofim Equity Fund (SRFMX) is a fund that has an expense ratio of 0.7%, and a management fee of 0.5%. SRFMX 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 10.34% over the last five years, this fund clearly wins.
General Electric (NYSE:GE) RSP Mutual Fund (GESSX) has an expense ratio of 0.14% and management fee of 0.1%. GESSX 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 10.75% over the last five years, this is a well-diversified fund with a long track record of success.
PIMCO StockPlus Long Duration Institutional (PSLDX) has an expense ratio of 0.59% and management fee of 0.59%. PSLDX is a Government - Bonds option, and holds securities issued by the U.S. federal government in their portfolios; these funds focus across the curve, meaning the yields and interest rate sensitivity will vary. With yearly returns of 16.39% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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