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Are You Invested In These 3 Mutual Fund Misfires? - December 19, 2019

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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.

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.

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.

Touchstone Ultra Short Duration Fixed Income A (TSDAX): Expense ratio: 0.69%. Management fee: 0.25%. After expenses, the 5 year return is -0.65%, meaning your fees are far higher than the fund's returns.

Templeton Global Balanced Fund C (FCGBX). Expense ratio: 1.95%. Management fee: 0.25%. Over the last 5 years, this fund has generated annual returns of 0.32%.

Legg Mason BW International Opportunities Bond FI (LWOFX - Free Report) - 1% expense ratio, 0.5% management fee. This fund has yielded yearly returns of -0.09% 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.

Hartford Stock HLS IB (HIBSX) is a fund that has an expense ratio of 0.77%, and a management fee of 0.48%. HIBSX 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 yearly returns of 11.52% over the last five years, this fund clearly wins.

MFS Research R5 (MFRKX) is a stand out fund. MFRKX 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 five-year annualized performance of 11.1% and expense ratio of 0.48%, this diversified fund is an attractive buy with a strong history of performance.

VY T. Rowe Price Diversified Mid Cap Growth Investor (IAXIX) has an expense ratio of 0.78% and management fee of 0.74%. IAXIX 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. With annual returns of 12.38% over the last five years, this fund is a well-diversified fund with a long track record of success.

Bottom Line

These examples underscore the huge range in quality of mutual funds - from the really bad to the astonishingly good. There is no reason for your advisor to keep your money in any fund that charges more than you get in return (unless they're getting something out of it, like a high commission).

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