You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
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.
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 A (HRLAX): 1.25% expense ratio and 0.85% management fee. HRLAX is a Global - Equity mutual fund investing in bigger markets like the U.S., Europe, and Japan; these kinds of funds aren't limited by geography. With a five year after-costs return of -2.89%, you're for the most part paying more in charges than returns.
PSI Tactical Growth Fund A (FXTAX): 1.9% expense ratio, 1% management fee. FXTAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. This fund has an annual returns of -1.17% over the last five years. Another fund guilty of having investors pay more in fees than returns.
First Investor International Opportunities Bond Institutional (FIOEX) - 0.97% expense ratio, 0.75% management fee. FIOEX is an International Bond - Developed fund, and these funds funds focus on fixed income securities from developed nations apart from the United States. This usually results in countries like Japan, Germany, the UK, France, and Australia dominating the list of top holdings. FIOEX has generated annual returns of -0.18% 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.
MassMutual Select Small Cap Growth Equity Admiral (MSGLX) is a fund that has an expense ratio of 1.16%, and a management fee of 0.8%. MSGLX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With yearly returns of 10.32% over the last five years, this fund clearly wins.
T. Rowe Price Tax-Efficient Equity (PREFX) has an expense ratio of 0.78% and management fee of 0.64%. PREFX 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 13.13% over the last five years, this is a well-diversified fund with a long track record of success.
Hartford Mid Cap Fund HLS IB (HBMCX) has an expense ratio of 0.95% and management fee of 0.66%. HBMCX is a Mid Cap Blend mutual fund that typically features a portfolio filled with stocks of various sizes and styles; it allows for a diversification strategy focusing on companies with market caps between $2 billion and $10 billion. With annual returns of 11.09% over the last five years, this fund is a well-diversified fund with a long track record of success.
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