Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new 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.
Hussman Strategic Growth Fund (HSGFX): This fund has an expense ratio of 1.14% and a management fee of 0.9%. 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. HSGFX is a Long Short - Equity mutual fund, which look at taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline, but overall, hope to minimize their market exposure. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Wells Fargo (NYSE:WFC) Short Duration Government A (MSDAX): 0.8% expense ratio, 0.35%. MSDAX 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. This fund has yearly returns of 0.64% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Aberdeen International Equity A (GIGAX) - 1.53% expense ratio, 0.8% management fee. GIGAX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. GIGAX has generated annual returns of -1.06% 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.
Janus Henderson Growth & Income S (JADGX): Expense ratio: 1.13%. Management fee: 0.6%. JADGX is a Large Cap Blend fund, targeting companies with market caps of over $10 billion. These funds offer investors a stability, and are perfect for people with a "buy and hold" mindset. This fund has achieved five-year annual returns of an astounding 11.18%.
Principal Large Cap Growth I R3 (PPUMX) is a stand out fund. PPUMX 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 five-year annualized performance of 10.91% and expense ratio of 1.16%, this diversified fund is an attractive buy with a strong history of performance.
MFS Mid-Cap Growth Fund I (OTCIX) is an attractive fund with a five-year annualized return of 13.82% and an expense ratio of just 0.87%. OTCIX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers.
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.
If you have concerns or any doubts about your investment advisor, read our just-released report:
4 Warning Signs That Your Advisor Might be Sabotaging Your Financial Future
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Zacks Investment Research