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Avoid These 3 Mutual Fund Misfires - December 27, 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.

High fees coupled with poor results: It's a straightforward equation for an awful mutual fund. Some are more regrettable than others - and some are bad to the point that they have got a "Strong Sell" from our Zacks Rank, the lowest positioning of the almost 19,000 mutual funds we rank every day.

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 Short-Term Bond Fund A (LCAMX): This fund has an expense ratio of 1.66% and a management fee of 0.75%. Without even doing any in-depth analysis, just the fact that you are paying more in fees than you're earning in returns is reason enough not to invest. LCAMX is an Investment Grade Bond - Short fund that targets the short end of the curve by focusing on bonds that mature in less than two years. The fund has lagged performance-wise, so perhaps a simpler index future investing strategy might be more effective.

Pzena Emerging Markets Value Institutional (PZIEX): 1.23% expense ratio, 1% management fee. PZIEX is a Non US - Equity option, focusing their investments acoss emerging and developed markets, and can often extend across cap levels too. This fund has an annual returns of 0.72% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Invesco Global Mkt Neutral Fd Cl Y - 1.24% expense ratio, 0.95% management fee. MKNYX is a Market Neutral - Equity mutual fund. These portfolios usually hold 50% of their securities in a long position, as well as 50% in a short position. MKNYX has generated annual returns of -3.7% 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.

KP Large Cap Equity Institutional (KPLCX): 0.3% expense ratio and 0.24% management fee. KPLCX 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 10.69% over the last five years, this fund is a winner.

Principal Blue Chip Fund I (PBCKX): Expense ratio: 0.67%. Management fee: 0.66%. PBCKX 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. PBCKX has managed to produce a robust 15.39% over the last five years.

ClearBridge Dividend Strategy 1 (LCBOX) is an attractive fund with a five-year annualized return of 10.33% and an expense ratio of just 0.77%. LCBOX is classified as an Allocation Balanced fund, which seeks to invest in a balance of asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual.

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.

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