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3 Mutual Fund Misfires to Avoid - October 08, 2019
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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.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.
AIG US Government Securities A : This fund has an expense ratio of 0.99% and a management fee of 0.65%. 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. SGTAX is categorized as a Government Bond - Long option, which holds securities issued by the U.S. federal government; these funds focus on the long end of the curve, which can result in higher yields but greater sensitivity to interest rate fluctuations. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Templeton World A (TEMWX - Free Report) : 1.04% expense ratio, 0.69%. TEMWX 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. This fund has yearly returns of 0.07% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
US Global Investor Allocation American Equity : Expense ratio: 1.79%. Management fee: 0.59%. GBTFX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of just 0.76%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Victory RS Science&Technology A (RSIFX - Free Report) : Expense ratio: 1.47%. Management fee: 1%. RSIFX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. This fund has achieved five-year annual returns of an astounding 18%.
T. Rowe Price New Horizons (PRNHX - Free Report) has an expense ratio of 0.77% and management fee of 0.64%. PRNHX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. Thanks to yearly returns of 15.66% over the last five years, PRNHX is an effectively diversified fund with a long reputation of solidly positive performance.
MFS Mass Investors Growth Stock B (MIGBX - Free Report) has an expense ratio of 1.47% and management fee of 0.33%. MIGBX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. With yearly returns of 11.44% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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 08, 2019
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.
High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every 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.
AIG US Government Securities A : This fund has an expense ratio of 0.99% and a management fee of 0.65%. 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. SGTAX is categorized as a Government Bond - Long option, which holds securities issued by the U.S. federal government; these funds focus on the long end of the curve, which can result in higher yields but greater sensitivity to interest rate fluctuations. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
Templeton World A (TEMWX - Free Report) : 1.04% expense ratio, 0.69%. TEMWX 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. This fund has yearly returns of 0.07% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
US Global Investor Allocation American Equity : Expense ratio: 1.79%. Management fee: 0.59%. GBTFX is part of the Large Cap Blend section, and these mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. With annual returns of just 0.76%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Victory RS Science&Technology A (RSIFX - Free Report) : Expense ratio: 1.47%. Management fee: 1%. RSIFX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. This fund has achieved five-year annual returns of an astounding 18%.
T. Rowe Price New Horizons (PRNHX - Free Report) has an expense ratio of 0.77% and management fee of 0.64%. PRNHX is a Small Cap Growth mutual fund and tends to feature small companies in up-and-coming industries and markets. Thanks to yearly returns of 15.66% over the last five years, PRNHX is an effectively diversified fund with a long reputation of solidly positive performance.
MFS Mass Investors Growth Stock B (MIGBX - Free Report) has an expense ratio of 1.47% and management fee of 0.33%. MIGBX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. With yearly returns of 11.44% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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