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Are You Invested In These 3 Mutual Fund Misfires? - January 31, 2020

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If your financial advisor made you buy any of these "Mutual Fund Misfires of the Market" with high expenses and low returns, you need to reassess your 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.

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.

Catalyst Small Cap Insider Buy I (CTVIX): Expense ratio: 1.52%. Management fee: 1.25%. After expenses, the 5 year return is -2.36%, meaning your fees are far higher than the fund's returns.

Goldman Sachs Dynamic Allocation A (GDAFX): 1.16% expense ratio, 0.79%. GDAFX is an Allocation Balanced mutual fund. Allocation Balanced funds look to invest across asset types, like stocks, bonds, and cash, and including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. This fund has yearly returns of -0.77% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.

American Century Short Term Government C (TWACX - Free Report) : Expense ratio: 1.56%. Management fee: 0.54%. TWACX is a Government Bond - Short fund, and these funds hold securities issued by the U.S. federal government. This category focuses on the short end of the curve, and are seen as extremely low risk securities from a default perspective. With annual returns of just -0.03%, 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 I (NBMLX) is a fund that has an expense ratio of 0.7%, and a management fee of 0.65%. NBMLX 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. With yearly returns of 11.02% over the last five years, this fund clearly wins.

American Funds Growth Fund of America F2 (GFFFX) is a stand out fund. GFFFX 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. With five-year annualized performance of 12.63% and expense ratio of 0.42%, this diversified fund is an attractive buy with a strong history of performance.

Principal Equity Income I (PEIIX) has an expense ratio of 0.52% and management fee of 0.51%. PEIIX is a Large Cap Value mutual fund, which invests in stocks with a market cap of $10 billion of more, but whose share prices do not reflect their intrinsic value. With annual returns of 10.48% over the last five years, this fund is a well-diversified fund with a long track record of success.

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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