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Mutual Fund Misfires of the Market - December 30, 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 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.

MSIF Multi-Asset Fund I (MMPIX): Expense ratio: 1.07%. Management fee: 0.85%. After expenses, the 5 year return is -4.03%, meaning your fees are far higher than the fund's returns.

Harding Loevner Front Emerging Markets Investor (HLMOX): 2% expense ratio, 1.35% management fee. HLMOX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. This fund has an annual returns of -4.12% over the last five years. Another fund guilty of having investors pay more in fees than returns.

Invesco Long/Short Equity A - 1.58% expense ratio, 0.8% management fee. LSQAX is a Long Short - Equity option. These funds' investment strategy consists of minimizing overall market exposure, while at the same time taking long positions in equities that are expected to appreciate and short positions in equities that are projected to decline. LSQAX has generated annual returns of -0.65% 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.

Columbia Seligman Communications and Information R (SCIRX): 1.49% expense ratio and 0.87% management fee. SCIRX is a Sector - Tech mutual fund, allowing investors to own a stake in a notoriously volatile sector with a much more diversified approach. With an annual return of 16.92% over the last five years, this fund is a winner.

DFA US Large Cap Growth Institutional (DUSLX) has an expense ratio of 0.2% and management fee of 0.17%. DUSLX 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 12.05% over the last five years, DUSLX is an effectively diversified fund with a long reputation of solidly positive performance.

Wilmington Large-Cap Strategy I (WMLIX) is an attractive fund with a five-year annualized return of 10.58% and an expense ratio of just 0.25%. WMLIX 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.

Bottom Line

We hope that your investment advisor (if you use one) has you invested in one or all of the top-ranked mutual funds we've reviewed. But if that is not the case, and your advisor has you invested in any of the funds on our "worst offender" list, it might be time to have a conversation or reconsider this vitally important relationship.

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