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3 Mutual Fund Misfires to Avoid - December 03, 2019

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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.

High fees plus poor performance: It's a pretty simple formula for a bad mutual fund. Some are worse than others - and some are so bad that they have earned a "Strong Sell" on the Zacks Rank, the lowest ranking of the nearly 19,000 mutual funds we rank daily.

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.

Cutler Fixed Income Fund (CALFX): 1.57% expense ratio and 0.5% management fee. CALFX is a Government - Bonds option, and holds securities issued by the U.S. federal government in their portfolios; these funds focus across the curve, meaning the yields and interest rate sensitivity will vary. With a five year after-costs return of 1.1%, you're for the most part paying more in charges than returns.

SA International Value Fund (SAHMX): SAHMX is a Non US - Equity fund. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels. SAHMX offers an expense ratio of 1.12% and annual returns of 0.67% 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.

Gabelli Focus Five Fund A (GWSAX - Free Report) : Expense ratio: 1.71%. Management fee: 1%. GWSAX is a Small Cap Value mutual fund, investing in small companies with stock market valuation less than $2 billion. With annual returns of just -2.3%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.

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.

Principal Equity Income I (PEIIX): Expense ratio: 0.52%. Management fee: 0.51%. PEIIX is a Large Cap Value mutual fund, which invests in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. This fund has achieved five-year annual returns of an astounding 10.17%.

Eagle Mid Cap Growth R3 (HAREX) has an expense ratio of 1.3% and management fee of 0.52%. HAREX is a Mid Cap Growth mutual fund. Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers. With annual returns of 11.14% over the last five years, this is a well-diversified fund with a long track record of success.

Victory Sycamore Small Company Opportunity R (GOGFX) has an expense ratio of 1.46% and management fee of 0.76%. GOGFX is a Small Cap Value mutual fund option, which typically invest in companies with market caps under $2 billion. With yearly returns of 10.9% over the last five years, this fund is well-diversified with a long reputation of salutary performance.

Bottom Line

Along these lines, there you have it - if your financial guide has you put your money into any of our "Mutual Fund Misfires of the Market," there is a strong likelihood that they are either dormant at the worst possible time, inept, or (in all probability) filling their pockets with high fee commissions at the cost of your financial objectives.

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