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Mutual Fund Misfires of the Market - October 25, 2019
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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.
Tanaka Growth Fund (TGFRX - Free Report) : Expense ratio: 2.45%. Management fee: 1%. After expenses, the 5 year return is -0.16%, meaning your fees are far higher than the fund's returns.
PACE International Emerging Markets Equity Y (PWEYX - Free Report) : PWEYX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. PWEYX offers an expense ratio of 1.45% and annual returns of 0.68% 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.
American Funds ST Bond Fund of America 529E (CEAMX - Free Report) - 0.96% expense ratio, 0.28% management fee. CEAMX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. CEAMX has generated annual returns of 0.77% 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.
Principal Real Estate Security Institutional (PIREX - Free Report) is a fund that has an expense ratio of 0.91%, and a management fee of 0.81%. PIREX is a Sector - Real Estate fund, and these kinds of mutual funds typically invest in eeal estate investment trusts (REITs) due to their taxation rules. With yearly returns of 11.68% over the last five years, this fund clearly wins.
Wells Fargo Endeavor Select Admiral (WECDX - Free Report) has an expense ratio of 1.18% and management fee of 0.7%. WECDX 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 annual returns of 14.05% over the last five years, this is a well-diversified fund with a long track record of success.
MSIF Global Franchise I (MSFAX - Free Report) has an expense ratio of 0.91% and management fee of 0.76%. MSFAX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With annual returns of 11.24% 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
Mutual Fund Misfires of the Market - 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.
Tanaka Growth Fund (TGFRX - Free Report) : Expense ratio: 2.45%. Management fee: 1%. After expenses, the 5 year return is -0.16%, meaning your fees are far higher than the fund's returns.
PACE International Emerging Markets Equity Y (PWEYX - Free Report) : PWEYX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. PWEYX offers an expense ratio of 1.45% and annual returns of 0.68% 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.
American Funds ST Bond Fund of America 529E (CEAMX - Free Report) - 0.96% expense ratio, 0.28% management fee. CEAMX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. CEAMX has generated annual returns of 0.77% 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.
Principal Real Estate Security Institutional (PIREX - Free Report) is a fund that has an expense ratio of 0.91%, and a management fee of 0.81%. PIREX is a Sector - Real Estate fund, and these kinds of mutual funds typically invest in eeal estate investment trusts (REITs) due to their taxation rules. With yearly returns of 11.68% over the last five years, this fund clearly wins.
Wells Fargo Endeavor Select Admiral (WECDX - Free Report) has an expense ratio of 1.18% and management fee of 0.7%. WECDX 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 annual returns of 14.05% over the last five years, this is a well-diversified fund with a long track record of success.
MSIF Global Franchise I (MSFAX - Free Report) has an expense ratio of 0.91% and management fee of 0.76%. MSFAX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With annual returns of 11.24% 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