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Mutual Fund Misfires of the Market - September 26, 2019 (Revised)
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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.
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.
Delaware Limited Term Diversified Income C (DTICX - Free Report) : This fund has an expense ratio of 1.45% and a management fee of 0.5%. 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. DTICX is a Diversified Bonds mutual fund. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. The fund has a total annual fee of 1.45% on top of lagging performance, so perhaps a simpler index future investing strategy might be more effective.
Putnam International Growth B . Expense ratio: 1.06%. Management fee: 0.5%. Over the last 5 years, this fund has generated annual returns of 0.5%, while charging total annual fees of 1.06%. PINWX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets.
Federated Fund for US Government Security B - 1.71% expense ratio, 0.41% management fee. FUSBX is part of the Government Mortgage - Intermediate fund section. Government Mortgage - Intermediate funds focus on the mortgage-backed security (MBS) market and securities that usually have at least three years to maturity but less than 10. FUSBX charges a total annual fee of 1.71% and has generated annual returns of 0.66% 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.
Fidelity Blue Chip Growth (FBGRX - Free Report) : 0.74% expense ratio, 0.56% management fee. FBGRX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With expenses of just 0.74% and annual returns of 13.81% over the last five years, this fund is a winner.
Vanguard Dividend Growth Fund (VDIGX - Free Report) has an expense ratio of 0.22% and management fee of 0.21%. VDIGX 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. With an expenses of just 0.22% and annual returns of 11.18% over the last five years, this is a well-diversified fund with a long track record of success.
MFS Growth Fund I (MFEIX - Free Report) has an expense ratio of 0.67%, management fee of 0.55%. MFEIX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. With expenses of just 0.67% and annual returns of 14.44% over the last five years, this fund is a well-diversified fund with a long track record of success.
Bottom Line
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
If you have concerns or any doubts about your investment advisor, read our just-released report:
(NOTE: We are re-issuing this article to correct an inaccuracy. The original article, published Tuesday, September 26, 2019, should no longer be relied upon.)
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Mutual Fund Misfires of the Market - September 26, 2019 (Revised)
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.
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.
Delaware Limited Term Diversified Income C (DTICX - Free Report) : This fund has an expense ratio of 1.45% and a management fee of 0.5%. 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. DTICX is a Diversified Bonds mutual fund. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. The fund has a total annual fee of 1.45% on top of lagging performance, so perhaps a simpler index future investing strategy might be more effective.
Putnam International Growth B . Expense ratio: 1.06%. Management fee: 0.5%. Over the last 5 years, this fund has generated annual returns of 0.5%, while charging total annual fees of 1.06%. PINWX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets.
Federated Fund for US Government Security B - 1.71% expense ratio, 0.41% management fee. FUSBX is part of the Government Mortgage - Intermediate fund section. Government Mortgage - Intermediate funds focus on the mortgage-backed security (MBS) market and securities that usually have at least three years to maturity but less than 10. FUSBX charges a total annual fee of 1.71% and has generated annual returns of 0.66% 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.
Fidelity Blue Chip Growth (FBGRX - Free Report) : 0.74% expense ratio, 0.56% management fee. FBGRX is a Large Cap Growth mutual fund, and these funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers. With expenses of just 0.74% and annual returns of 13.81% over the last five years, this fund is a winner.
Vanguard Dividend Growth Fund (VDIGX - Free Report) has an expense ratio of 0.22% and management fee of 0.21%. VDIGX 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. With an expenses of just 0.22% and annual returns of 11.18% over the last five years, this is a well-diversified fund with a long track record of success.
MFS Growth Fund I (MFEIX - Free Report) has an expense ratio of 0.67%, management fee of 0.55%. MFEIX is an All Cap Growth mutual fund investing in a wide variety of equities, no matter the size of the company and as long as the firm exhibits growth characteristics. With expenses of just 0.67% and annual returns of 14.44% over the last five years, this fund is a well-diversified fund with a long track record of success.
Bottom Line
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
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
(NOTE: We are re-issuing this article to correct an inaccuracy. The original article, published Tuesday, September 26, 2019, should no longer be relied upon.)