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.
The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.
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.
Eaton (NYSE:ETN) Vance Government Obligation R (ERGOX): Expense ratio: 1.51%. Management fee: 0.65%. After expenses, the 5 year return is 0.67%, meaning your fees are far higher than the fund's returns.
Timothy Plan Defensive Strategy C (TPDCX). Expense ratio: 2.16%. Management fee: 0.65%. Over the last 5 years, this fund has generated annual returns of 1.24%.
Templeton Emerging Markets Small Cap C (TCEMX) - 2.62% expense ratio, 1.35% management fee. TCEMX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. TCEMX has generated annual returns of 1.8% over the last five years. Ouch!
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.
MSIF Global Franchise I (MSFAX): 0.91% expense ratio and 0.76% management fee. MSFAX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With an annual return of 12.51% over the last five years, this fund is a winner.
Hartford Core Equity R4 (HGISX) has an expense ratio of 0.74% and management fee of 0.35%. HGISX 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 annual returns of 12.33% over the last five years, this is a well-diversified fund with a long track record of success.
Dreyfus US Equity Fund I (DPUIX): Expense ratio: 0.82%. Management fee: 0.75%. DPUIX 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. DPUIX has produced a 11.74% over the last five years.
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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Zacks Investment Research