If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess 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.
Ivy Natural Resources C (IGNCX): 2.46% expense ratio and 0.85% management fee. IGNCX is a Sector - Energy fund, which are comprised of various changing and hugely important industries throughout the massive global energy sector. With a five year after-expenses return of -4.4%, you're mostly paying more in fees than returns.
CGM Focus Fund (CGMFX): 1.28% expense ratio, 0.98%. CGMFX 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. This fund has yearly returns of -3.11% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
AB Unconstrained Bond A (AGSAX) - 0.9% expense ratio, 0.5% management fee. AGSAX is a Diversified Bonds investment option; these funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. AGSAX has generated annual returns of -0.33% 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.
BlackRock (NYSE:BLK) Advantage Large Cap Growth I (CMVIX): Expense ratio: 0.62%. Management fee: 0.57%. CMVIX 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. This fund has achieved five-year annual returns of an astounding 12.49%.
Neuberger Berman Mid Cap Growth Adviser (NBMBX) has an expense ratio of 1.21% and management fee of 0.9%. NBMBX 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. With annual returns of 10.47% over the last five years, this is a well-diversified fund with a long track record of success.
JPMorgan (NYSE:JPM) Small Cap Growth I (OGGFX) has an expense ratio of 0.99% and management fee of 0.65%. OGGFX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With annual returns of 14.48% 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