We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Mutual Fund Misfires to Avoid - October 25, 2019
Read MoreHide Full Article
You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
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.
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.
American Funds ST Bond Fund of America 529C (CCAMX - Free Report) : Expense ratio: 1.47%. Management fee: 0.28%. After expenses, the 5 year return is 0.28%, meaning your fees are far higher than the fund's returns.
Principal International Emerging Markets J (PIEJX - Free Report) : PIEJX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. PIEJX offers an expense ratio of 1.43% and annual returns of 0.94% 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.
AMG SouthernSun Small Cap N (SSSFX - Free Report) - 1.25% expense ratio, 0.75% management fee. SSSFX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. SSSFX has generated annual returns of 0.5% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Fidelity Advisor Small Cap Growth I (FCIGX - Free Report) is a fund that has an expense ratio of 1.05%, and a management fee of 0.81%. FCIGX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With yearly returns of 14.27% over the last five years, this fund clearly wins.
Principal Mid Cap J (PMBJX - Free Report) has an expense ratio of 0.83% and management fee of 0.58%. PMBJX 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 13.31% over the last five years, this is a well-diversified fund with a long track record of success.
Wilmington Large-Cap Strategy I (WMLIX - Free Report) has an expense ratio of 0.25% and management fee of 0.4%. WMLIX 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. With annual returns of 10.58% over the last five years, this fund is a well-diversified fund with a long track record of success.
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).
If you have concerns or any doubts about your investment advisor, read our just-released report:
Image: Bigstock
3 Mutual Fund Misfires to Avoid - October 25, 2019
You may need to start looking for a new financial advisor if your current one has put any of these high-fee, low-return "Mutual Fund Misfires of the Market" into your portfolio.
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.
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.
American Funds ST Bond Fund of America 529C (CCAMX - Free Report) : Expense ratio: 1.47%. Management fee: 0.28%. After expenses, the 5 year return is 0.28%, meaning your fees are far higher than the fund's returns.
Principal International Emerging Markets J (PIEJX - Free Report) : PIEJX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. PIEJX offers an expense ratio of 1.43% and annual returns of 0.94% 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.
AMG SouthernSun Small Cap N (SSSFX - Free Report) - 1.25% expense ratio, 0.75% management fee. SSSFX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. SSSFX has generated annual returns of 0.5% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
Fidelity Advisor Small Cap Growth I (FCIGX - Free Report) is a fund that has an expense ratio of 1.05%, and a management fee of 0.81%. FCIGX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. With yearly returns of 14.27% over the last five years, this fund clearly wins.
Principal Mid Cap J (PMBJX - Free Report) has an expense ratio of 0.83% and management fee of 0.58%. PMBJX 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 13.31% over the last five years, this is a well-diversified fund with a long track record of success.
Wilmington Large-Cap Strategy I (WMLIX - Free Report) has an expense ratio of 0.25% and management fee of 0.4%. WMLIX 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. With annual returns of 10.58% over the last five years, this fund is a well-diversified fund with a long track record of success.
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).
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