Back to top

Image: Bigstock

3 Mutual Fund Misfires to Avoid - December 24, 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.

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.

Leader Total Return C (LCCTX): 2.96% expense ratio and 0.75% management fee. LCCTX is part of the Investment Grade Bond - Intermediate fund group. These mutual funds focus on the middle part of the curve, generally with bonds that usually mature in more than three years but less than 15 years. With a five year after-costs return of 0.25%, you're for the most part paying more in charges than returns.

ClearBridge International Small Cap A (LCOAX). Expense ratio: 1.42%. Management fee: 0.75%. Over the last 5 years, this fund has generated annual returns of -0.76%.

BlackRock Allocation Target Shares P (BATPX - Free Report) : This fund has an expense ratio of 0.2% and management fee of 0%. BATPX is part of the Government Mortgage - Intermediate fund section. Government Mortgage - Intermediate funds focus on the mortgage-backed security (MBS) market and securities that usually have at least three years to maturity but less than 10. With an annual average return of -2.36% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.

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.

AB Small Cap Growth K (QUAKX): 1.09% expense ratio and 0.75% management fee. QUAKX is a Small Cap Growth mutual fund building their portfolio around stocks with market caps under $2 billion and large growth opportunities. With an annual return of 11.78% over the last five years, this fund is a winner.

Putnam Growth Opportunities R6 (PGOEX) has an expense ratio of 0.66% and management fee of 0.58%. PGOEX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Thanks to yearly returns of 13.93% over the last five years, PGOEX is an effectively diversified fund with a long reputation of solidly positive performance.

Janus Henderson Global Technology Institutional (JGLTX) has an expense ratio of 0.75% and management fee of 0.64%. JGLTX is part of the Sector - Tech mutual fund category that invests in technology and lets investors own a stake in a notoriously volatile sector, but with a much more diversified approach. With yearly returns of 19.14% 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.

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.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

BlackRock Alloc Target Shrs P (BATPX) - free report >>

Published in