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.
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.
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.
Transamerica Emerging Markets Equity I (IEMTX): Expense ratio: 1.08%. Management fee: 0.92%. After expenses, the 5 year return is -0.21%, meaning your fees are far higher than the fund's returns.
Wells Fargo Absolute Return A (WARAX): WARAX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. WARAX offers an expense ratio of 1.53% and annual returns of 0.07% 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.
First Investor International Opportunities Bond A - 1.44% expense ratio, 0.75% management fee. FIOBX is an International Bond - Developed fund, and these funds funds focus on fixed income securities from developed nations apart from the United States. This usually results in countries like Japan, Germany, the UK, France, and Australia dominating the list of top holdings. FIOBX has generated annual returns of -1.41% over the last five years. Ouch!
3 Top Ranked Mutual Funds
Now that you've seen the worst Zacks Ranked mutual funds, let's have a look at some of the highest ranked funds with the lowest fees.
AQR Large Cap Defensive Style N (AUENX): 0.65% expense ratio and 0.25% management fee. AUENX 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. With an annual return of 13.62% over the last five years, this fund is a winner.
MFS Growth R6 (MFEKX): Expense ratio: 0.57%. Management fee: 0.55%. MFEKX 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. MFEKX has managed to produce a robust 14.61% over the last five years.
Principal Mid Cap J (PMBJX): Expense ratio: 0.83%. Management fee: 0.58%. PMBJX is a Mid Cap Growth mutual fund. These mutual funds choose companies with a stock market valuation between $2 billion and $10 billion. PMBJX has produced a 13.31% over the last five years.
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.
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