Back to top

Image: Bigstock

Avoid These 3 Mutual Fund Misfires - December 18, 2019

Read MoreHide Full Article

If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your 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.

Templeton Institutional Foreign Equity Primary (TFEQX): 0.83% expense ratio and 0.76% management fee. TFEQX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. With a five year after-expenses return of 0.29%, you're mostly paying more in fees than returns.

Victory INCORE Low Duration Bond C (RLDCX): 1.62% expense ratio, 0.45%. RLDCX 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. This fund has yearly returns of 0.69% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

Invesco Long/Short Equity C - 2.33% expense ratio, 0.8% management fee. This fund has yielded yearly returns of -0.32% in the course of the last five years. Too bad!

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.

ClearBridge Dividend Strategy Y (SOPYX): 0.73% expense ratio and 0.65% management fee. SOPYX is a part of the Allocation Balanced fund category; these funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. With an annual return of 10.36% over the last five years, this fund is a winner.

MFS Mass Investors Growth Stock C (MIGDX) has an expense ratio of 1.48% and management fee of 0.33%. MIGDX 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 annual returns of 12.76% over the last five years, this is a well-diversified fund with a long track record of success.

Vanguard Global Mineral Volatility Investor (VMVFX): Expense ratio: 0.22%. Management fee: 0.2%. VMVFX 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. VMVFX has produced a 10.47% 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