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.
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.
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.
Ivy Natural Resources C (IGNCX): Expense ratio: 2.07%. Management fee: 0.85%. After expenses, the 5 year return is -9.16%, meaning your fees are far higher than the fund's returns.
MSIF Active International Allocation A (MSIBX): MSIBX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. MSIBX offers an expense ratio of 1.23% and annual returns of 0.46% 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.
AB Unconstrained Bond A - 0.9% expense ratio, 0.5% management fee. AGSAX is classified as a Diversified Bonds fund, which offers exposure to a wide variety of fixed income types, stretching across various issuers, credit levels, and maturities. AGSAX has generated annual returns of -0.36% over the last five years. Ouch!
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.
AB Small Cap Growth Adviser (QUAYX): 0.91% expense ratio and 0.75% management fee. QUAYX is a Small Cap Blend mutual fund, allowing investors a way to diversify their funds among various types of small-cap stocks. With an annual return of 12.04% over the last five years, this fund is a winner.
Principal Blue Chip Fund A (PBLAX) is a stand out fund. PBLAX 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 five-year annualized performance of 13.62% and expense ratio of 1%, this diversified fund is an attractive buy with a strong history of performance.
Davis Real Estate Y (DREYX): Expense ratio: 0.73%. Management fee: 0.55%. DREYX 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. DREYX has produced a 10.78% over the last five years.
We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.
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