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Mutual Fund Misfires of the Market - November 29, 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.
Leader Short-Term Bond Fund Institutional (LCCIX - Free Report) : This fund has an expense ratio of 1.16% and a management fee of 0.75%. 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. LCCIX is an Investment Grade Bond - Short fund. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
PIMCO Unconstrained Bond C (PUBCX - Free Report) : 1.95% expense ratio, 0.95% management fee. PUBCX 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. This fund has an annual returns of 1.62% over the last five years. Another fund guilty of having investors pay more in fees than returns.
AB Allocation Market Real Return A (AMTAX - Free Report) : This fund has an expense ratio of 1.26% and management fee of 0.75%. AMTAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. With an annual average return of -3.49% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
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.
JPMorgan Large Cap Growth R5 (JLGRX - Free Report) : Expense ratio: 0.53%. Management fee: 0.45%. JLGRX 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. This fund has achieved five-year annual returns of an astounding 13.19%.
Principal Capital Appreciation R5 (PCAQX - Free Report) has an expense ratio of 0.75% and management fee of 0.47%. PCAQX 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. Thanks to yearly returns of 10.9% over the last five years, PCAQX is an effectively diversified fund with a long reputation of solidly positive performance.
Neuberger Berman Mid Cap Growth R3 (NMGRX - Free Report) : Expense ratio: 1.35%. Management fee: 0.76%. NMGRX 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. NMGRX has produced a 10.44% over the last five years.
Bottom Line
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.
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
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Mutual Fund Misfires of the Market - November 29, 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.
Leader Short-Term Bond Fund Institutional (LCCIX - Free Report) : This fund has an expense ratio of 1.16% and a management fee of 0.75%. 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. LCCIX is an Investment Grade Bond - Short fund. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.
PIMCO Unconstrained Bond C (PUBCX - Free Report) : 1.95% expense ratio, 0.95% management fee. PUBCX 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. This fund has an annual returns of 1.62% over the last five years. Another fund guilty of having investors pay more in fees than returns.
AB Allocation Market Real Return A (AMTAX - Free Report) : This fund has an expense ratio of 1.26% and management fee of 0.75%. AMTAX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual. With an annual average return of -3.49% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
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.
JPMorgan Large Cap Growth R5 (JLGRX - Free Report) : Expense ratio: 0.53%. Management fee: 0.45%. JLGRX 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. This fund has achieved five-year annual returns of an astounding 13.19%.
Principal Capital Appreciation R5 (PCAQX - Free Report) has an expense ratio of 0.75% and management fee of 0.47%. PCAQX 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. Thanks to yearly returns of 10.9% over the last five years, PCAQX is an effectively diversified fund with a long reputation of solidly positive performance.
Neuberger Berman Mid Cap Growth R3 (NMGRX - Free Report) : Expense ratio: 1.35%. Management fee: 0.76%. NMGRX 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. NMGRX has produced a 10.44% over the last five years.
Bottom Line
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.
Do You Know the Top 9 Retirement Investing Mistakes?
Whether you're planning to retire early or not, don't let investing mistakes derail your plans.
If you have $500,000 or more to invest and want to learn more, click the link to download our free report, 9 Retirement Mistakes that will Ruin Your Retirement.