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.
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.
Lord Abbett Inflation Focused I (LIFIX): 0.48% expense ratio and 0.3% management fee. LIFIX 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-expenses return of 0.05%, you're mostly paying more in fees than returns.
Victory Trivalent Emerging Markets Small Cap A (MAEMX). Expense ratio: 1.73%. Management fee: 0.3%. Over the last 5 years, this fund has generated annual returns of 0.29%.
CM Advisors Small Cap Value I : Expense ratio: 1.25%. Management fee: 0.85%. CMOVX is a Small Cap Value fund, and these funds are known for investing in companies with market caps under $2 billion. With annual returns of just -3.34%, it's no surprise this fund has received Zacks' "Strong Sell" ranking.
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.
Neuberger Berman Mid Cap Growth R6 (NRMGX): Expense ratio: 0.61%. Management fee: 0.55%. NRMGX 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. This fund has achieved five-year annual returns of an astounding 10.54%.
BMO Large-Cap Growth Fund A (BALGX) has an expense ratio of 0.79% and management fee of 0.35%. BALGX 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 11.4% over the last five years, BALGX is an effectively diversified fund with a long reputation of solidly positive performance.
Columbia Global Equity Fund Z (CGEZX) has an expense ratio of 1.08% and management fee of 0.87%. CGEZX 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. With yearly returns of 10.51% over the last five years, this fund is well-diversified with a long reputation of salutary performance.
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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