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.
American Funds ST Bond Fund of America C (ASBCX): This fund has an expense ratio of 1.42% and a management fee of 0.27%. 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. ASBCX 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. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Gabelli Focus Five Fund C (GWSCX): 2.46% expense ratio, 1%. GWSCX is a Small Cap Value mutual fund, investing in small companies with stock market valuation less than $2 billion. This fund has yearly returns of -1.19% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
AIG (NYSE:AIG) Commodity Strategy W (SUNWX) - 1.52% expense ratio, 1% management fee. SUNWX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. SUNWX has generated annual returns of -2.04% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Fidelity Growth Strategies Fund K (FAGKX) is a winner, with an expense ratio of just 0.41% and a five-year annualized return track record of 10.5%.
MassMutual Premier Disciplined Growth A (MPGAX) has an expense ratio of 1.1% and management fee of 0.45%. MPGAX 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. With annual returns of 11.14% over the last five years, this is a well-diversified fund with a long track record of success.
Conestoga Smid Cap Institutional (CCSGX): Expense ratio: 0.85%. Management fee: 0.85%. CCSGX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. CCSGX has produced a 14.8% over the last five years.
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