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 plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.
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.
Templeton Frontier Markets Adviser (FFRZX): Expense ratio: 1.71%. Management fee: 1.4%. After expenses, the 5 year return is -3.05%, meaning your fees are far higher than the fund's returns.
Wells Fargo (NYSE:WFC) Absolute Return C (WARCX): 2.28% expense ratio, 0.72%. WARCX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. This fund has yearly returns of 1.9% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Oppenheimer SteelPath MLP Alph Plus I (MLPNX): This fund has an expense ratio of 2.55% and management fee of 1.25%. MLPNX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. With an annual average return of -9.31% 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.
Transamerica US Growth T (TWMTX): 0.82% expense ratio and 0.7% management fee. TWMTX 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. With an annual return of 11.91% over the last five years, this fund is a winner.
AQR Large Cap Defensive Style I (AUEIX) is a stand out fund. AUEIX 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. With five-year annualized performance of 13.39% and expense ratio of 0.38%, this diversified fund is an attractive buy with a strong history of performance.
MFS Mid-Cap Growth Fund R2 (MCPRX) is an attractive fund with a five-year annualized return of 13.39% and an expense ratio of just 1.34%. MCPRX 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.
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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Original post
Zacks Investment Research