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.
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.
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.
Touchstone Ultra Short Duration Fixed Income Y (TSYYX): 0.44% expense ratio and 0.25% management fee. TSYYX is part of the Government Bond - Short fund category. Often seen as risk-free assets, these funds hold securities issued by the U.S. federal government and they focus on the short end of the curve. With a five year after-expenses return of -0.19%, you're mostly paying more in fees than returns.
Hartford Global Real Asset R3 (HRLRX): 1.5% expense ratio, 0.85%. HRLRX is a Global - Equity mutual fund, which invests their assets in large markets, leveraging the global economy. This fund has yearly returns of 1.43% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Invesco Long/Short Equity A - 1.58% expense ratio, 0.8% management fee. This fund has yielded yearly returns of -0.99% in the course of the last five years. Too bad!
3 Top Ranked Mutual Funds
There you have it: some prime examples of truly bad mutual funds. In contrast, here are a few funds that have achieved high Zacks Ranks and have low fees.
AQR TM Large Cap Momentum Style I (ATMOX): Expense ratio: 0.4%. Management fee: 0.25%. ATMOX 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. This fund has achieved five-year annual returns of an astounding 10.32%.
MFS Global New Discovery R4 (GLNMX) is a stand out fund. GLNMX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With five-year annualized performance of 11.19% and expense ratio of 1.26%, this diversified fund is an attractive buy with a strong history of performance.
JPMorgan Equity Income Fund R6 (OIEJX) has an expense ratio of 0.48% and management fee of 0.4%. OIEJX 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 annual returns of 10.04% over the last five years, this fund is a well-diversified fund with a long track record of success.
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
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