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.
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.
America First Defensive Growth I (DGQIX): 2.8% expense ratio and 1.5% management fee. DGQIX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. With a five year after-expenses return of -2.72%, you're mostly paying more in fees than returns.
Ashmore Emerge Markets Local Current Bond C (ELBCX): 1.97% expense ratio, 0.95%. ELBCX is part of the International Bond - Emerging section. International Bond - Emerging funds offer a unique type of geographic diversification by focusing on fixed income securities from emerging nations around the globe. This fund has yearly returns of 1.65% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Oppenheimer SteelPath MLP Alph Plus A (MLPLX) - 2.8% expense ratio, 1.25% management fee. MLPLX is a Sector - Energy mutual fund, which encompasses a wide range of vastly changing and vitally important industries throughout this massive global sector. MLPLX has generated annual returns of -10.53% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that we've covered our "worst offender" list, let's take a look at some of Zacks' highest ranked mutual funds with some of the lowest fees you may want to consider.
Congress Mid Cap Growth Retail (CMIDX): 1.08% expense ratio and 0.6% management fee. CMIDX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. With an annual return of 10.65% over the last five years, this fund is a winner.
American Beacon SGA Global Growth Investor (SGAPX): Expense ratio: 1.19%. Management fee: 0.8%. SGAPX 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. SGAPX has managed to produce a robust 13.8% over the last five years.
Meridian Growth Investor (MRIGX): Expense ratio: 0.87%. Management fee: 0.76%. MRIGX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. MRIGX has produced a 10.35% over the last five years.
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