Back to top

Image: Bigstock

3 Mutual Fund Misfires to Avoid - December 02, 2019

Read MoreHide Full Article

Does your current advisor have your money invested in these "Mutual Fund Misfires of the Market" that charge high fees for low returns? If so, it may be time for a new advisor.

The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.

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.

ClearBridge Intl Small Cap A2 : 1.63% expense ratio and 0.8% management fee. LCRNX 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. With a five year after-expenses return of -0.97%, you're mostly paying more in fees than returns.

Touchstone Ultra Short Duration Fixed Income I (TSDIX - Free Report) : TSDIX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. TSDIX offers an expense ratio of 0.39% and annual returns of -0.28% 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 Allocation Market Real Return Z (AMTZX - Free Report) - 0.84% expense ratio, 0.75% management fee. This fund has yielded yearly returns of -2.3% in the course of the last five years. Too bad!

3 Top Ranked Mutual Funds

Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.

T. Rowe Price Small Cap Stock Adviser (PASSX - Free Report) : Expense ratio: 1.14%. Management fee: 0.74%. PASSX is a Small Cap Blend mutual fund, and usually targets stocks with market caps of less than $2 billion, letting investors diversify their funds among other kinds of small-cap equities. This fund has achieved five-year annual returns of an astounding 11.38%.

MFS Mass Investors Growth Stock R5 (MIGNX - Free Report) has an expense ratio of 0.38% and management fee of 0.33%. MIGNX 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. Thanks to yearly returns of 14.01% over the last five years, MIGNX is an effectively diversified fund with a long reputation of solidly positive performance.

Cohen & Steers Real Estate Security A (CSEIX - Free Report) : Expense ratio: 1.12%. Management fee: 0.68%. Sector - Real Estate funds like CSEIX are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. CSEIX has produced a 11.3% over the last five years.

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.

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.

Published in