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 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.
Oppenheimer Limited Term Government R (OLTNX): 1.1% expense ratio and 0.42% management fee. OLTNX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. With a five year after-costs return of 0.98%, you're for the most part paying more in charges than returns.
Rydex Energy Services H (RYVAX): RYVAX is classified as a Sector - Energy mutual fund. Throughout the massive global energy sector, these funds hold a wide range of quickly changing and vitally important industries. RYVAX offers an expense ratio of 1.72% and annual returns of -18.24% over the last five years. Even if this fund can be positioned as a hedge during the recent bull-market, paying more in fees than returns over the long-term should never be an acceptable result.
Janus Henderson Europe Focus A (HFEAX) - 1.32% expense ratio, 0.98% management fee. This fund has yielded yearly returns of -0.15% in the course of the last five years. Too bad!
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.
T. Rowe Price Cap Appreciation (PRWCX) is a fund that has an expense ratio of 0.7%, and a management fee of 0.59%. PRWCX is categorized as an All Cap Value fund, and like the name suggests, invests across the cap spectrum in small-cap, mid-cap, and large-cap companies. With yearly returns of 10.54% over the last five years, this fund clearly wins.
Fidelity Select Health Care (FSPHX) is a stand out fund. FSPHX is classified as a Sector - Health fund. Healthcare is one of the biggest sectors of the American economy, and these kinds of mutual funds provide a great opportunity to invest in this industry. With five-year annualized performance of 10.76% and expense ratio of 0.71%, this diversified fund is an attractive buy with a strong history of performance.
Thrivent Mid Cap Stock Fund A (AASCX) is an attractive fund with a five-year annualized return of 10.14% and an expense ratio of just 1.04%. AASCX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion.
Bottom Line
These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).
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Zacks Investment Research