Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new 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.
Hartford Global Real Asset I (HRLIX): Expense ratio: 0.97%. Management fee: 0.85%. After expenses, the 5 year return is -1.58%, meaning your fees are far higher than the fund's returns.
Janus Henderson Emerging Markets A (HEMAX): 1.37% expense ratio, 1% management fee. HEMAX 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 an annual returns of -0.73% over the last five years. Another fund guilty of having investors pay more in fees than returns.
Goldman Sachs (NYSE:GS) Local Emerging Markets Debt IR (GLIRX): This fund has an expense ratio of 0.96% and management fee of 0.8%. GLIRX is an International Bond - Emerging option; these funds focus on fixed income securities from a variety of emerging international markets. With an annual average return of -1.1% 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.
Columbia Seligman Communications and Information Z (CCIZX) is a fund that has an expense ratio of 0.99%, and a management fee of 0.87%. With a much more diversified approach, CCIZX--part of the Sector - Tech mutual fund category--gives investors a way to own a stake in the notoriously risky tech sector. With yearly returns of 17.5% over the last five years, this fund clearly wins.
JPMorgan (NYSE:JPM) Small Cap Growth Fund R6 (JGSMX) has an expense ratio of 0.74% and management fee of 0.65%. JGSMX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With annual returns of 14.09% over the last five years, this is a well-diversified fund with a long track record of success.
Principal Capital Appreciation R4 (PCAPX) has an expense ratio of 0.87% and management fee of 0.47%. PCAPX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. With annual returns of 10.76% 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